Incident: The company released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved revenue of 28.314 billion yuan, +18.8% year-on-year, and net profit to mother of 5.48 billion yuan, +32.8% year-on-year. 24Q3 achieved revenue of 9.97 billion yuan, +13.4% year over year, and net profit to mother of 1.98 billion yuan, +53.5% year over year.

Revenue: The volume and price of gasoline have risen sharply, the leading siphon effect continues to be prominent, and continues to show good growth and certainty. 24Q3's revenue was 9.97 billion yuan, up 18.8% year on year. Global automobile sales growth rate was about -9% year on year (data source Marklines). The company's revenue growth continued to outperform the industry, showing good growth and certainty, mainly due to ① the continuous increase in the share of high value-added products such as panoramic canopies, HUD front blocks, and sandwich side windows, driving unit prices; ② the further increase in global competitiveness brought about an increase in share.

Profit: The Q3 gross margin increased significantly compared to the previous month, and profitability, which is expected to be mainly driven by overseas improvements, economies of scale, and cost optimization. 2024Q3's profitability continues to be excellent, with a gross profit margin of 38.78%, +2.47pct year on year, +1.05pct. Considering 24Q3 generating 0.12 billion yuan exchange loss, synchronously restoring 24Q3 operating profit margin 24.9%, and further increasing 0.14pct on a good basis in Q2, the company's profitability continues to be excellent, mainly: ① US factory profit improvement: (24H1 Fuyao US net interest rate of 11.52%, year-on-year +4.05pct); ② Increased scale efficiency Operating leverage; ③ Decrease in the price of soda ash and natural gas freight.

To increase production, ASP, share, and new business go hand in hand, starting from cycle to growth. We continue to be optimistic about the continued increase in the company's automotive glass ASP under the accelerated penetration of high-value-added steam glass, such as the penetration rate of the canopy, and the increase in the company's domestic and foreign market share with further optimization of the pattern, and the aluminum trim business is expected to reverse into the harvest period.

1) Product upgrade and ASP upgrade: The panoramic canopy is a standard accessory for electric vehicles. The ASP is at least 1 times that of steam glass, and the competition pattern is better than that of traditional vapor glass. At the same time, the canopy continues to be upgraded to coated insulated canopies - dimmed canopies - ambient light canopies, etc. The steam glass upgrade blossomed more and more, the accelerated increase in HUD penetration rate led to the doubling of ASP on the front windshield, and the application of double-layer side windows in electric vehicles gradually became popular.

2) To increase production, there is still room for global share: The company announced at the end of 23 and the beginning of '24 that it will invest 3.25 billion yuan and 5.75 billion yuan in Fujian and Hefei respectively to build an annual production capacity of 20.5 million square meters of automotive safety glass, 26.1 million square meters of automotive safety glass production capacity, and two high-quality float glass production lines, adding a total of 46.6 million square meters of glass production capacity (32.5% of the company's production scale in 2023). According to the 2023 annual report, the company's capital expenditure for 2024 is expected to be around 8.12 billion yuan, a record high in the past five years. Taking advantage of the expansion of production capacity shows the confidence and competitiveness that will continue to increase in subsequent share. There is still room for improvement in the company's global market share under the further optimization of the industry pattern and empowered by aluminum trim in the 3rd year of the pandemic.

3) The inflection point of the aluminum trim business is about to begin the release cycle: SAM OEM orders are about to be put into operation, and domestic factories in Fuqing and Changchun are gradually climbing.

Profit forecast: Considering that the company's profit continues to exceed expectations, the 24-26 net profit was 7.68 billion yuan, 9.19 billion yuan, and 11.14 billion yuan (previous value was 7.08 billion yuan, 8.32 billion yuan, 10 billion yuan). The year-on-year growth rate of the company's net profit in 24-26 was 36%, 20%, and 21%, respectively. Corresponding to the current PE 19X, 16X, and 13X, Fuyao is the leading global automobile and glass market, and the pattern has been clarified to bring profit Resilient and electric smart product upgrades have led peers to continue to increase their share. The leading siphon effect is outstanding, while maintaining a high dividend ratio and maintaining a “buy” rating.

Risk warning events: economic recovery falls short of expectations, automobile demand falls short of expectations, SAM integration falls short of expectations, volume of high-value-added products falls short of expectations, US factory profits fall short of expectations, etc.