Core ideas
Q1 The company's revenue, return to mother, and deductions were 9.91 billion yuan, 2.03 billion yuan, and 1.987 billion yuan, respectively, +12.16%, +46.25%, and +30.90% year-on-year respectively. The revenue side continues to implement the “sharp rise in volume and price” logic of the main business. Foreign exchange boosts profits even further. The decline in gross profit is mainly affected by changes in accounting policies and a decline in production capacity, and is expected to rise steadily in the future. The company has long focused on the main automotive glass business and is steadily advancing the global layout. High-value-added products such as canopy glass and HUD glass continue to penetrate, driving the value of bicycles to increase. I am optimistic that the company's production capacity will be released one after another, and the global share will continue to increase.
occurrences
The company released its 2025 quarterly report. The first quarter's revenue, net profit to mother, and non-net profit after deducting non-net profit were 9.91 billion yuan, 2.03 billion yuan, and 1.987 billion yuan respectively, up 12.16%, 46.25%, and 30.90% year-on-year respectively.
Brief review
The main auto and glass business “increased in volume and price”, and Q1 net profit was +46% compared to the same period last year. Q1 revenue, return to mother, and deductions were 9.91 billion yuan, 2.03 billion yuan, and 1.987 billion yuan, respectively, +12.16%, +46.25%, and +30.90% year-on-year, respectively, -9.40%, +0.52%, and +4.83% month-on-month respectively.
On the revenue side, Q1's main business revenue was 9.027 billion yuan, +11.5% year over month, and -9.3% month over month. The growth rate was superior to the downstream industry (according to GlobalData data, Q1 global light vehicle sales volume was about 21.88 million vehicles, +5% year over month, and -12% month on month), mainly benefiting from the “sharp rise in volume and price” of the main auto and glass industry. On the quantitative side, Q1 Fuyao Auto Glass's sales volume was +7.84%, and the operating siphon effect continued, or indicated an increase in share; ASP was +3.36% year over year, mainly due to the increase in the share of high-value-added products. Q1 After excluding ordinary injection molding, the proportion of high-value-added glass was about 49.13%, +4.5 pct compared to the previous year. On the profit side, Q1 returned to mother and did not increase year-on-year. In addition to revenue side contributions, it mainly benefited from lower prices of natural gas and soda ash, higher year-on-year exchange earnings, and increased profits from investment income.
The rise in production capacity disrupts gross profit, and cost control remains stable. 25Q1 gross profit margin and net margin were 35.40% and 20.50%, respectively, -1.42pct and +4.78pct year-on-year, respectively, and +3.28pct and +2.02pct month-on-month, respectively. Among them, the year-on-year decline in gross margin was mainly affected by accounting policy adjustments (packaging fees are included in operating costs starting in 24Q4) - 0.94 pct. Furthermore, after further excluding the effects of additional personnel remuneration and depreciation after the second phase expansion of production in Fuqing, Anhui, and US factories, Q1 gross margin was +0.2 pct year over year. The Q1 period/sales/management/R&D/finance expense ratios were 10.64%, 3.02%, 6.89%, 4.27%, and -3.53%, respectively, -5.25pct, -1.37pct, -1.15pct, +0.01pct, -2.75pct, +1.24pct, +3.35pct, -0.47pct, +0.04pct, and -1.68pct year-on-year, respectively. Among them, changes in sales expenses were affected by changes in accounting policies, and control of management and R&D expenses was stable.
The expansion of production capacity is expected to drive a steady increase in market share and strengthen Fuyao's ability to withstand risks with abundant production capacity in the US. At present, the company has begun a new cycle of global production capacity expansion. On the basis of relatively stable downstream demand and continuous improvement in its own competitiveness, it is expected to further amplify the siphon effect and consolidate its leading position in the industry. Domestic factories in Fuqing and Hefei will be put into operation in 25Q4 or early '26. At that time, they will have an annual production scale of 46.6 million square meters of gasoline glass and 2 high-quality float glass production lines. The overseas US Phase II plant has been successfully completed and put into operation. In the medium to long term, it will help Fuyao to further improve its business layout in North America. In the short term, after many expansions, Fuyao's US plant currently has an annual production capacity of nearly 7 million units. It is not affected by additional tariffs, and rising capacity utilization will also improve profits. The remaining export volume to the US is about 1.4-1.5 million units, accounting for about 5% of Fuyao's total sales volume. It is expected to decline further after sales increase in other regions, so the impact on the Group's performance is limited.
Investment advice
The company focuses on the main auto glass business, increasing its market share and progressing steadily in the global layout. In the long run, the company is expected to further consolidate its leading position in the industry. As high value-added products such as canopy glass and HUD glass continue to penetrate and new features are added, ASP will continue to improve. At the same time, the production capacity of the aluminum trim business continues to climb, expanding the company's growth space. We expect the company's net profit to be 8.8 billion yuan and 10.2 billion yuan respectively in 2025-2026, corresponding to current PE values of 17X and 15X, maintaining a “buy” rating.
risk analysis
1. The industry boom falls short of expectations. The domestic economy recovered steadily in 2025, but the exact pace remains to be seen. Demand in the automobile industry may fluctuate accordingly; it will still take time to fully implement the trade-in policy for consumer goods such as automobiles, which will affect the recovery process of industry demand.
2. The competitive pattern of the industry has deteriorated. Domestic and foreign parts suppliers compete. With changes in supply factors such as technological progress and new production capacity investment, industry competition may intensify in the future, and the company's market share and profitability may fluctuate.
3. The progress of customer development and mass production of new projects fell short of expectations. The company accelerates the expansion of new customers. Considering the fluctuation in the R&D pace of new model projects of car companies, there may be fluctuations in the fixed project cycle within a specific period of time; in addition, the mass production schedule falls short of expectations due to the company's new production capacity construction or being affected by uncontrollable factors.
