Bank of America Securities released a report indicating that FUYAO GLASS (03606.HK) had an increase of 17% year-on-year in the fourth quarter last year, reaching 10.9 billion yuan, which was 6% lower than analysts' expectations. The gross margin dropped by 4.4 percentage points to 32.1% year-on-year, based on changes in the company's accounting that moved packaging costs from promotional expenses to cost of sales; after adjustment, the gross margin increased by 0.16 percentage points to 37.2% quarter-on-quarter.
The institution slightly lowered its delivery and sales forecast for the company this year by 2%, and based on accounting adjustments, lowered its earnings forecast for this year by 3%. The institution sees this year as a transformation period for the company, with relatively weak sales growth due to ongoing Construction of two new plants in Anhui and Fujian, as well as increased production capacity utilization at the USA phase II plant. Sales growth is expected to accelerate further next year due to sufficient production capacity coming online.
The institution slightly adjusted the target price for FUYAO GLASS from 62.1 yuan to 62 yuan, maintaining a "Buy" rating.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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