CMSC International: Cuts Fuyao Glass Industry Group (03606) target price to HK$76; FX and one-off factors weigh on performance

CMSC International issued a research report downgrading Fuyao Glass Industry Group's (03606) profit forecasts for 2026 to 2028 by 11%, 8%, and 9%, and lowering its target price from HK$83 to HK$76, equivalent to 16.2x FY2027 P/E, while maintaining an "Overweight" rating. Fuyao Glass Industry Group's third-quarter net profit was RMB 2.036 billion (same unit below), down 9.9% year-on-year and quarter-on-quarter, below the market expectation of RMB 2.07 billion. Excluding exchange losses, US plant fire restoration costs, and one-off after-sales service fees totaling approximately RMB 432 million, pre-tax profit is estimated at approximately RMB 2.919 billion, up 0.5% year-on-year and 4.4% below market expectations. The downgrade to earnings forecasts mainly reflects the impact of foreign exchange, weak recovery in the domestic auto market, and other one-off factors. The bank believes that despite the third-quarter results falling short of expectations, the company's position in the industry chain remains intact, and electrification and intelligence bring continuous product innovation opportunities. It expects that after the domestic auto market stabilizes in 2027, the company is expected to resume double-digit growth in revenue and profit.