FUYAO GLASS remains the top choice for JPMorgan in the Auto Parts sector in China.
According to the Smart Finance APP, JPMorgan has released a research report stating that it maintains a "Shareholding" rating for FUYAO GLASS (03606), and it is expected that FUYAO GLASS's gross margin will remain at a high level of approximately 38% this year, with its profit forecast exceeding the market by more than 10%. It believes that the recent stock price adjustment presents a good opportunity for shareholding, and FUYAO GLASS remains the bank's top choice in the Auto Parts sector in China, hence setting its H share Target Price at HKD 52.
The report states that FUYAO GLASS's stock price has fallen 7% since the beginning of the year. In addition to the stock possibly seeing profit-taking after an increase of 42% last year, the recent rise in Henry Hub Natural Gas prices in the USA and the European Union may also have led to adjustments in its stock price. The bank believes that the rise in USA Natural Gas prices has very limited impact on FUYAO GLASS's gross margin, while the increase in energy prices in the EU actually enhances the competitiveness of the company's export model. Moreover, China's Natural Gas prices have dropped year-on-year in the fourth quarter of last year and are likely to remain stable this year, which is positive news for FUYAO GLASS as most of its production is located within China.
