Fuyao Glass has made 2.6 billion yuan in the past year, and overseas business is expected to recover in 2021.

On the evening of March 29th, Fuyao Glass (600660) disclosed its annual report that the company's operating income in the past year was 19.907 billion yuan, down 5.67% from the same period last year, and the net profit belonging to shareholders of listed companies was 2.6 billion yuan, down 10.27% from the same period last year.

As for the reasons for the decline, Fuyao Glass explained that in 2020, the epidemic had a serious impact on the global economy, the global economy, trade and investment suffered a severe setback, the global economic growth rate declined sharply, and the global geopolitical situation was further tense. The monetary measures of quantitative easing in various countries have aggravated financial risks, and the global economy is beset with difficulties.

The revenue of Q4 is the highest in history, and the capital market continues to be bullish.

In 2020, due to the impact of the COVID-19 epidemic at home and abroad, the global automobile market experienced a sustained and deep adjustment. With the effective control of the domestic epidemic situation and the gradual recovery of production and life, the domestic automobile market has gradually picked up and ended its decline for many consecutive months, especially since the second half of 2020, benefiting from the macroeconomic stabilization and recovery and the favorable policies of local governments to promote automobile consumption, the domestic automobile market has rebounded rapidly.

According to the statistics of the World Automotive Organization ((OICA)), the global car production in 2020 was 77.622 million, down 15.8% from the same period last year. Among them, China's automobile production was 25.225 million, down 2.0% from the same period last year. With the exception of China, car production in other countries in the world fell 21.1% from the same period last year.

Based on this, the operation of Fuyao Glass reached an inflection point in the third quarter of 2020, with revenue of 6.13 billion yuan in the fourth quarter, an increase of 12.07% over the same period last year, an increase of 8.4% over the previous quarter, and the highest revenue in the company's history. The gross profit margin for the current quarter was 42.79%, up 5.23% from the same period last year, and 1.43% from the previous quarter, which shows that the company's profitability continues to improve. The net profit returned to the mother was 878 million yuan, with a net interest rate of 14.32%, up 4.23% from the fourth quarter of the previous year and 0.9% from the third quarter of the same year.

Affected by this, by the end of the day after the release of the results, its A shares (600660) rose by the daily limit of 46.9 yuan, while H shares rose 9.88% to 46.15 yuan on the same day.

Overseas business revenue shrinks and is expected to recover strongly in 2021

In 2019, the popularity of a documentary called "American Factory" made people see the hardships behind Fuyao's global layout. it was in this year that as the production capacity of American factories continued to climb, Fuyao's overseas business revenue reached 10.29 billion yuan. a year-on-year increase of 22.6%, accounting for an increase of 7 percentage points over the previous year to 48.8%.

This is the year that Fuyao Glass's overseas business accounts for the closest 50% of revenue. According to Fuyao's subsequent plans, 2020 will be the key year for its overseas business to further expand. However, no one would have thought that the start of 2020 would throw cold water on everyone.

In the first quarter of 2020, affected by the epidemic, in addition to normal production in Russian factories, Fuyao Glass plants in the United States and Europe retained only small-scale production based on orders. Earlier, Cao Dewang said publicly that Fuyao Glass, which used to have a global turnover of several billion a month, would normally make a profit of 400 million, but now it is less than 200 million. In other words, Fuyao Glass lost about 150 million yuan a month at that time.

Although Fuyao Glass soon returned to business as usual at home and abroad, according to its latest financial report, overseas business revenue in 2020 totaled 8.98 billion yuan, down 11.84 percent from the previous year, accounting for 45.73 percent of the company's total business and 3.05 percentage points lower than the previous year. The gross profit margin of overseas operations was 31.32%, down 6.84 percentage points from the same period last year.

Among them, according to the financial report, Fuyao Glass America Co., Ltd. achieved revenue of 3.25 billion yuan in the past year, down 16.72% from the same period last year, while net profit was only 28.902 billion yuan, a sharp drop of 97.02% compared with the same period in 2019. As Fuyao Glass aims to expand its business boundary, the German company FYSAM, which is acquired by entering the aluminum bright strip industry, lost 280 million yuan for the whole of 2020, a small reduction from the loss of 290 million yuan in 2019.

Excluding the impact of the epidemic in the United States and Europe, the performance of the above two companies is still impressive. This means that as the European and American markets gradually recover, the epidemic tends to be stable, and the superimposed German FYSAM enters a stable period of operation, reducing losses, or even turning losses into profits, Fuyao's overseas business is expected to achieve rapid development in 2021.

Canopy + HUD, car glass may welcome the second growth.

From the current point of view, whether domestic or global, the automotive glass market presents a situation of oligopoly. According to the company announcement, Fuyao Glass has more than 65% of the domestic market share in 2020. Asahi Niazi, Saint-Gobain, Xinyi Glass, Panzhizi and Shanghai Yaopi account for about 30%. It is precisely for this reason that Fuyao Glass has chosen to move towards the global market and absorb more global market share.

From the business side, the revenue of Fuyao Glass's main business, automotive glass, fell 5.36% to 17.942 billion yuan in 2020 compared with the same period last year, and the gross profit margin fell 0.06% to 34.47%; while the revenue of float glass fell 4.2% to 3.49 billion yuan, but the gross profit margin increased 3.51%. Return to the growth trend again.

Benefiting from the continued rise in gross profit margin of float glass, Fuyao Glass's overall gross profit margin reached 39.51% in 2020, an increase of 2.05 percentage points over the previous year.

In fact, Tesla Model 3 all-glass roof design is leading the change in automobile design. Glass is no longer just glass, it is becoming the appearance "window" of intelligent cars, which is about to start a new round of revolution. As for the trend that the automotive glass industry in the future will popularize "full glass ceiling", HUD front windshield and other versatile automotive glass, it has also been generally favored by many research institutions and securities firms.

Guoxin Securities believes in a research report that, on the one hand, there is 50% room for improvement in the area of automobile glass bicycles (4m2/ cars ~ 6m2/ cars). On the other hand, HUD, smart dimming, 5G antenna and other functions bring about an increase in the value of a single square meter, which is 2-3 times the improvement space (150 yuan / m2 400 yuan / m2).

As a result, with the continuous improvement of the permeability of canopy glass, HUD and other versatile automobile glass, there is no doubt that the matching value of bicycles will be further improved.

Fuyao Glass, on the basis of its original research and development, carried out strategic cooperation with BOE Group in the fields of automotive intelligent dimming glass and window display in 2021, and signed a strategic cooperation agreement with Big Dipper Tong Zhaopin Technology Co., Ltd. we are jointly committed to the integration of high-precision positioning and communication multi-mode smart antenna and automotive glass, so as to enhance the innovation and competitiveness of the company's products.

In this context, "the proportion of high value-added products such as canopy, thermal insulation, sound insulation, head-up display, dimming, UV protection, hydrophobicity, solar energy and edge modularization continues to increase, accounting for an increase of 2.64 percentage points over the same period last year." Fuyao glass said.

Facing the future, with the further popularization of high value-added automotive glass such as canopy and head-up display, and the steady progress of the integration work of FYSAM in Germany, aluminum strips and automotive glass business integration, in line with the customer intelligent, modular, integrated procurement trend, medium-and long-term or promote Fuyao Glass to usher in a second growth.

But looking forward to 2021, Cao Dewang, chairman of Fuyao Glass, said, "all walks of life are generally optimistic about the economic situation in 2021, and we need to see the hidden risks at the macro level: credit risk, labor shortage, rising prices of factors of production, and so on. Moreover, overseas epidemics have not been effectively controlled, which will become factors affecting annual development."