BofA Securities has released a research note indicating that Fuyao Glass (03606) generated revenue of RMB 11.6 billion in the second quarter of 2026, essentially flat year-on-year but up 11% quarter-on-quarter, which came in 5% below the firm's expectations.

The company's gross margin expanded by 1.7 percentage points year-on-year to 40.2%, surpassing forecasts, while the adjusted gross margin rose 0.4 percentage points to 38.9%. Operating profit grew 5% year-on-year to RMB 2.8 billion, exceeding the bank's estimate by 5%. However, net profit declined 19% year-on-year, landing 4% below expectations, primarily due to RMB 360 million in foreign exchange losses.

BofA Securities has reiterated its "Buy" rating on the stock, trimming the target price from HKD 75 to HKD 71. The firm has lowered its revenue forecasts for Fuyao Glass for the 2026 to 2028 period by an average of 10%, reflecting weaker volume assumptions. Meanwhile, given the company's solid margin performance, the bank has reduced its earnings projections by an average of 4% over the same timeframe.