Fuyao: the chain has improved performance, maintain Buy rating – Fine-brick text
Event:
Fuyao third quarter operating revenues increased 7.39%, net profit chain greatly increased 236.7 percent, in line with expectations. Quarterly Bulletin revealed that three quarters of the company to achieve revenues of 1.6 billion yuan, up 4.37%, growth
7.39%; net profit of 397 million yuan, up 134.5 percent, growth of 236.7 percent, corresponding to 0.20 yuan per share. First three quarters, the company achieved total revenues of 4.14 billion yuan, down 6.4%; net profit of 618 million yuan, up 1.4%, corresponding to 0.31 yuan per share.
Comments:
Automotive and real estate sales pick up strong demand pull glass, in the fourth quarter is expected to continue still. The company operating the third quarter revenues increased 7.39%, mainly due to the domestic automotive and real estate sales continued strong. September vehicle sales in a single month reached 1.33 million nationwide, reaching a record high total of 1-September car sales surged 33.7% year on year. In addition, continued strong sales of commercial 1-September total sales area grew 44.8% year on year. Taking into account the economic recovery will continue to drive cars and real estate sales, are expected in the fourth quarter is still expected to maintain strong demand for glass.
Glass price trend strong gross margins continued to rise. Downstream demand driving prices continued strength of glass, float glass of various types present in early lows over more than 40%, making the company gross margin was picking up quarter by quarter, third quarter gross margin of 45.3% over the same period in 2008 substantially increased by 14.5 percentage points year on year net profit growth is greater reason. The net profit growth of 236.7 percent sequential part of the chain due to gross margin increased by 3.4 percentage points, on the other hand it is because the second quarter provision for Hainan 215 million float glass production line for impairment of assets, making the chain a low base. Based on continued strong demand for the fourth quarter of the judge, is expected to glass prices are expected to remain at the current high level.
Rise in oil prices to rise in the cost of glass production, a certain negative impact on performance. As the international crude oil prices continue to rise, one of the main raw material of glass was heavy oil prices continue upward trend, heavy oil accounted for float glass production costs are usually about 30-40%, accounting for auto glass, about 15-20% of production costs, higher oil prices on the performance of the company will have some negative effects. However, considering the prospects for global economic recovery is not yet clear, the oil price in current prices rose sharply less likely, in addition, glass production accounted for about 25-30% of the cost base to low-weight consolidation, we believe that fourth quarter glass part of overall production costs rose slightly more than the single-quarter profit will be slightly lower, but the gross margin is expected to continue throughout the year to reach 40.7%, up 9.4 percentage points.
09,10-year EPS is expected to Fuyao 0.54 yuan and 0.71 yuan, 15 yuan target price, buy rating. Performance of the company's automotive glass will benefit from continued strong auto sales, while the height of the real estate market boom will also benefit from its architectural float glass business. 09,10-year EPS is expected to Fuyao 0.54 yuan and 0.71 yuan, 15 yuan for its target price, maintains the rating.
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