Regarding the reason for the performance growth, Fuyao Glass attributed it to the continuous increase in the proportion of high value-added products. As a leading enterprise in the automotive glass industry, Fuyao Glass stated that product quantity and price have increased in tandem, and the siphon effect has continued to increase, further boosting profit margins. In recent years, in order to seize global market share, Fuyao Glass is entering a new round of expansion cycle.
On July 29th, the global automotive glass leader Fuyao Glass's (600660.SH) stock price plummeted by 5.92% due to the impact of its overseas factories being searched by the US Department of Homeland Security, leading to market concerns. After the market closed, the company released its 2024 interim performance report, which showed a revenue growth that exceeded the industry average, giving investors reassurance.
According to the announcement, in the first half of this year, Fuyao Glass achieved revenues of RMB18.34 billion, an increase of 22.01% year-on-year, higher than the industry growth rate; achieved a net profit attributable to shareholders of RMB3.499 billion, a year-on-year increase of 23.35%, and a non-net profit of RMB3.689 billion, a year-on-year increase of 32.07%.
As for the reason for the performance growth, Fuyao Glass attributed it to the improvement of the company's all-round quality control capabilities, globalized delivery and capabilities enhancement, and the continuous increase in the proportion of high value-added products.
It is reported that the company's high value-added products mainly include panoramic sunroof glass, HUD, laminated tempered edge window glass, ADAS glass with camera, coated insulating glass, laminated heating glass, etc.
"As a leading enterprise in the automotive glass industry, the quantity and price of our products have increased in tandem, and the siphon effect has continued to increase, further boosting profit margins." Fuyao Glass stated in the performance report announcement.
Financial data shows that in the first quarter of this year, Fuyao Glass achieved revenue of RMB8.836 billion, an increase of 25.29% year-on-year; achieved a net profit attributable to shareholders of RMB1.388 billion, a year-on-year increase of 51.76%.
According to calculations, the company's revenue and net profit in the second quarter of this year were RMB9.504 billion and RMB2.111 billion, respectively, a year-on-year increase of 19.11% and 9.83%, with the growth rate slowing down from the first quarter.
Fuyao Glass emphasized that if the impact of exchange gains and losses and the termination of Taiyuan Jinnuo Industrial Co., Ltd. to perform the remaining 24% equity transfer of Beijing Futong Safe Glass Co., Ltd. was excluded, the company's total profit for the first half of this year increased by 59.95% compared with the same period last year.
According to the announcement, the company's foreign exchange losses for the first half of this year were RMB14.21 million, while foreign exchange gains for the same period last year were RMB0.599 billion; In addition, due to Taiyuan Jinnuo Industrial Co., Ltd. terminating the relevant agreement to transfer the remaining 24% equity of Fuyao Group Beijing Futong Safe Glass Co., Ltd., Fuyao Glass terminated the confirmation of the receivable equity transfer payment of approximately RMB0.321 billion, resulting in a decrease in investment income of RMB0.2121 billion for the first half of the year.
It is worth mentioning that in order to seize global market share, in recent years Fuyao Glass has entered a new round of expansion cycle. In 2022, Fuyao Glass increased its investment in its subsidiary Fuyao Glass America (referred to as "Fuyao America") by USD 0.65 billion, of which USD 0.3 billion was used to invest in the construction of Fuyao America's coating automotive glass production line, laminated tempered edge window production line, and other projects. In addition, Fuyao America's wholly-owned subsidiary Fuyao Glass Illinois Co., Ltd. invested USD 0.35 billion to build a float glass production line, four solar panel glass deep processing production lines, plant and supporting infrastructure projects.
Then, from the end of 2023 to the beginning of 2024, Fuyao Glass successively selected Fuzhou City, Fujian Province and Hefei City, Anhui Province for expansion, with a total investment of RMB9 billion. Among them, the planned annual production capacity of the Fuzhou factory is about 20.5 million square meters of automotive safety glass, and the Hefei base will form an annual production scale of about 26.1 million square meters of automotive safety glass and two high-quality float glass production lines. The two newly added automotive glass capacities will reach 46.6 million square meters.
Fuyao Glass's 2023 annual report shows that the company's sales of automotive glass last year were about 14 million square meters. According to Guosen Securities' research report, if calculated based on 4 square meters of glass per car, Fuyao Glass produced glass for 35 million cars last year, a year-on-year increase of 10%. Assuming that the aftermarket accounts for 33% of the fitted market, the company's global market share of automotive glass is estimated to be 30% in 2023, when global car sales reach 87.24 million units.
Regarding the reason for continuously increasing production capacity, Fuyao Glass Director Cao Dewang explained at the 2023 annual performance briefing, "It is mainly based on the company's confidence in the global automotive industry prospects, as well as the company's market position and competitive advantages in this industry. Investment and expansion of production can meet the demand for automotive glass in future automotive industry development."