On June 14, the Forbes 2024 Global 2000 list was released!
Among them, the Chinese company with the biggest increase in the ranking is automotive glass maker Fuyao Glass, which jumped from 1,938th last year to 1,532nd this year.
According to the data, from 2021 to 2023, Fuyao Glass's global market share will increase from 31% to 34%, far exceeding that of Plate Glass, Asahi Glass and Saint-Gobain in the same industry, and currently ranks first in the world.
In 2023, Fuyao Glass's domestic market share will be as high as 68%, a year-on-year increase of 5%. This means that in China, 2 out of every 3 cars use Fuyao Glass; In the world, 1 out of every 3 cars uses Fuyao Glass. It can be seen that Fuyao Glass has a strong industry position in the field of automotive glass.
The company's performance in recent years has also been very strong, and the data shows that from 2020 to 2023, Fuyao Glass's revenue has shown a steady upward trend, increasing from 19.91 billion yuan to 33.16 billion yuan, a year-on-year increase of 18.02%; In 2023, Fuyao Glass will achieve a net profit of 5.629 billion yuan, a year-on-year increase of 12%. It can be seen that Fuyao Glass can have such a monopoly in the global market share, which is inseparable from the company's outstanding performance.
In addition to the outstanding performance realization, the profitability of Fuyao Glass is also very good.
Here, let's focus on the core indicator that represents profitability, ROE.
From the perspective of ROE changes, the data shows that Fuyao Glass's ROE growth is very rapid, from 13.05% in 2020 to 18.97% in 2023, which shows that Fuyao Glass's profitability is strong and its performance is very good.
So, why is the company's ROE growing so fast?
According to the DuPont analysis of ROE, we can split ROE into three parts: net profit margin, equity multiplier and total asset turnover.
From 2020 to 2023, Fuyao Glass's equity multiplier will remain basically unchanged. However, Fuyao Glass's net profit margin has risen sharply from 12.06% in 2020 to 16.98% in 2023, and the total asset turnover ratio has also increased from 0.52 in 2020 to 0.62.
This shows that the increase in Fuyao Glass's net profit margin and total asset turnover ratio is the key factor driving the company's ROE growth.
Net profit margin;
We know that the factors that affect a company's net profit margin are gross margin and expenses.
From the perspective of gross profit margin, the data shows that from 2019 to 2023, the gross profit margin of Fuyao Glass has always remained above 34%, with excellent results, but it is generally on a downward trend.
Fuyao Glass's net profit margin has risen sharply from 13.05% in 2020 to 16.98% in 2023. This means that the factor that caused the company's net profit margin to rise was not gross margin, but expenses.
From the perspective of expenses, the data shows that from 2019 to 2023, Fuyao Glass's sales expense ratio will drop from 10.36% to 7.5%, and the management expense ratio will decrease from 7.02% to 4.64%. However, the change in financial expenses is small, and the impact on net profit margin is limited. This shows that Fuyao Glass's ability to control expenses during the period is gradually strengthening, which in turn promotes the increase of net profit margin.
According to the annual report, in 2023, Fuyao Glass's domestic market revenue will be 17.859 billion yuan, accounting for about 55% of the company's total revenue; The company's revenue in foreign markets was 14.76 billion yuan, accounting for 45% of the company's total revenue.
It can be seen that Fuyao Glass's high revenue is closely related to its strong brand influence and leading market share. This shows that the brand influence of Fuyao Glass is gradually expanding around the world, and the net profit margin is also rising.
total asset turnover;
From 2020 to 2023, Fuyao Glass's total asset turnover ratio showed an upward trend, while the company's inventory turnover ratio increased from 3.85 in 2020 to 4.06 in 2023, and the fixed asset turnover ratio increased significantly from 1.38 in 2020 to 2.24 in 2023. This means that the improvement of Fuyao Glass's operating capacity is mainly due to the acceleration of inventory and fixed asset turnover.
Next, let's take a look at the inventory situation of Fuyao Glass.
Judging from the annual report, in 2023, the ending book value of Fuyao Glass's inventory will be 5.144 billion yuan, a year-on-year decrease of 4.81% and a decrease of 260 million yuan. In terms of the classification of inventories, the main decrease was concentrated in raw materials. In 2023, the book value of Fuyao Glass's raw materials at the end of the period will be 1.76 billion, a decrease of 280 million compared with the beginning of the period.
It can be seen that Fuyao Glass has strengthened the effective control of raw material inventory, accelerated the company's inventory turnover rate, and promoted the increase of total asset turnover rate.
Not only inventory, but also the company's fixed asset turnover rate is rising.
From the perspective of capacity utilization, in the first quarter of 2024, Fuyao's overseas automotive glass production will reach about 4.7 million, and the capacity utilization rate will increase to 85%. This shows that Fuyao Glass is gradually improving the company's capacity utilization rate in overseas markets, thereby promoting the company's fixed asset turnover and continuous increase in ROE.
So, what is the growth of Fuyao Glass in the future?
First, automotive glass has the logic of rising volume and price.
quantitatively;
One is that the production and sales volume of the downstream automotive industry continues to increase. According to the data, China's car sales rose from 25.77 million units in 2019 to 30.09 million units in 2023. This shows that the downstream automotive industry of Fuyao Glass has a good development trend, and it is expected that China's automobile production and sales will continue to increase in the future, thereby driving the sales of automotive glass to rise.
The other is that the glass area of bicycles is increasing year by year, which promotes the increase in sales. In the 50s of the 20th century, the area of bicycle glass in China was about 2.2 square meters, and around 2020, the area of bicycle glass increased to about 4.2 square meters, about twice that of the early years. It can be seen that the growth of automotive glass area is expected to further drive the increase in the production and sales of automotive glass of Fuyao Company.
price;
According to the data, Fuyao Glass has significantly increased the price of a single square meter of automotive glass from 152 yuan in 2016 to 213 yuan in 2023. At the same time, in recent years, the company has also actively promoted the rapid penetration of panoramic canopy glass, and the average price of sunroof glass required for a car is 1500-2000 yuan. This shows that the price of Fuyao Glass is also rising year by year, so as to promote the company to achieve both volume and price increases.
Second, high R&D capabilities
Judging from the data, from 2019 to 2023, Fuyao Glass's R&D expenses have always maintained an upward trend, increasing from 813 million yuan to 1.403 billion yuan. This shows that Fuyao Glass continues to invest heavily in product research and development, which is conducive to producing more high value-added products and achieving the company's future performance growth.
Third, the layout of the globalization strategy
According to the annual report, Fuyao Glass has business in 10 overseas countries except for China, and currently ranks first in the global automotive glass industry.
This shows that the globalization pattern of Fuyao Glass has taken shape, which will not only help the company cope with changes in the international situation, but also hope to find new profit growth points in the future.
Finally, to sum up.
As the world's largest market share and the industry leader in the field of automotive glass, Fuyao Glass is expected to further explore the global market and maintain continuous growth in performance in the future.
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