Fuyao Glass Industry Group (3606.HK): 3Q26 Missed; Volume Grew but ASP Slowed

Fuyao's 3Q26 earnings fell 10% YoY to Rmb2.0bn, mainly due to higher selling cost (+27% YoY to Rmb406mn, including a Rmb78mn quality-related provision expected to be fully covered by insurance in 4Q26) and continued FX headwind (Rmb264mn loss vs. Rmb120mn in 3Q25). Excluding FX, 3Q26 operating profit fell 2% YoY, the first decline in three years and slightly below market expectations. Revenue grew 3% YoY, but the volume/ASP mix shifted: management guided 3Q26 ASP growth of 3.9% YoY (6.4% ex-FX) versus 8.7% in 1H26, implying auto glass volume returned to YoY growth after a 3.4% decline in 1H26. Morgan Stanley views the FX loss and quality provision as one-off, non-event cost items, but is concerned that ASP growth may slow or that an ASP-volume trade-off may be structural. Rating Equal-weight, PT HK$53.50.