UBS: Lowers Fuyao Glass Industry Group (03606) target price to HK$80, reiterates "Buy" rating.

UBS released a research report stating that due to slower-than-expected recovery in auto demand, it has lowered Fuyao Glass Industry Group's (03606) earnings forecasts for 2026 to 2028 by 2% to 4%, cut its target price from HK$85 to HK$80, and reiterated its "Buy" rating. The bank noted that Fuyao Glass Industry Group's current valuation is about 10.5 times its forecast 2027 price-to-earnings ratio, close to a five-year low, with a forecast 2027 dividend yield of 5.7%, making both its valuation and shareholder returns attractive. Excluding foreign exchange effects, earnings in the first half of this year still grew 8% year on year, and within the bank's auto supply chain coverage, Fuyao is one of the few companies to achieve gross margin expansion. The bank believes the market is overly concerned that weak auto demand will drag down earnings, underestimating Fuyao Glass Industry Group's capabilities, and expects accelerating realization of overseas orders, an increase in domestic aftermarket share, and expansion of production capacity for high value-added products to become drivers of sales volume and average selling price.