Goldman Sachs: Target price for Fuyao Glass Industry Group (03606) set at 73 Hong Kong dollars, maintains "buy" rating.

Goldman Sachs released a research report stating that it maintains a "buy" rating on Fuyao Glass Industry Group (03606) H shares, based on a forecasted price-to-earnings ratio of 16.7 times for 2026, with a 12-month target price of HK$73; based on a forecasted price-to-earnings ratio of 18.5 times for 2026, the A-share target price is maintained at RMB 73. The bank has adjusted its earnings forecast per share for 2026 to 2028 by -1% to +2% to reflect the slowdown in shipment growth and the increase in average selling price. Fuyao Glass Industry Group's revenue in the first quarter of this year increased by 5% compared to the same period last year, mainly affected by a 5.2% year-on-year decline in global automobile production. However, Fuyao's shipment volume only dropped by 3.7%, indicating a continued increase in market share. Management expects that under geopolitical tensions, overall cost inflation (such as natural gas and freight) will have limited impact; looking ahead for the full year, the price of soda ash and freight is expected to decline throughout the year. The company expects capitalization of construction in progress to remain stable in 2026. The bank predicts that the first quarter will be a seasonal trough for automobile production, and with an increase in gross profit margin and operating profit margin, annual revenue growth will accelerate. For the full year of 2026, the bank forecasts the company's revenue to be RMB 50.5 billion, a year-on-year increase of 10%, mainly benefiting from an 8.4% year-on-year increase in average selling price and a stable 1.5% year-on-year increase in sales volume; gross profit margin is 37.8%; profit before tax increases by 13% year-on-year, with a profit before tax margin of 22.5%, a 0.5 percentage point increase from the same period last year.