Zhongtong Finance learned that Guosheng Securities released a research report stating that the domestic auto industry structure continues to optimize, the marginal relief of price war, and the end demand is expected to improve on a weekly basis. The total sales volume of passenger vehicles is expected to maintain a year-on-year growth rate of 4-7% throughout the year. In the overseas market, the imposition of EU tariffs is controllable, and domestic automakers have a strong cost advantage. In the short term, strengthening the import of models and medium- and long-term localization production is expected to significantly mitigate the impact of tariffs. Under the background of continued validation of intelligence, high-end and globalization, leading companies still have the potential to run ahead. In addition, the valuation of the auto parts sector has fallen back, and leading companies have a good basic performance under the drive of the repair of the domestic market and the high-growth driven by exports of passenger vehicles.
Market Review: This week (6.17-6.21) the SW Automotive sector rose by 0.34% overall, ranking 5/31 in the sector. Looking at finer sub-sectors, SW commercial vehicles rose 4%, SW passenger vehicles rose 2%, SW motorcycles and others rose 6%, SW auto services fell 5%, and SW auto parts fell 1%.
Automobiles: The industry structure continues to optimize, focusing on BYD and the new car cycle of the Huawei system. Sales data for the industry has fluctuated over the past two weeks, mainly affected by the off-season and the wait-and-see sentiment caused by the price war. Looking ahead, the relief of the price war, key new cars such as the Qin L, Haibao 06, New Model M7, and Xiangjie S9 entering the delivery period, and end demand is expected to improve on a weekly basis, with the total sales volume of passenger vehicles expected to maintain a year-on-year growth rate of 4-7% throughout the year. In the overseas market, the imposition of EU tariffs is controllable, and domestic automakers have a strong cost advantage. In the short term, strengthening the import of models and medium- and long-term localization production is expected to significantly mitigate the impact of tariffs. Under the background of continued validation of intelligence, high-end, and globalization, leading companies still have the potential to run ahead.
Auto Parts: Layout of Q2 excellent performance companies, grasp the opportunities of robots and vehicle-road cloud themes. According to the China Association of Automobile Manufacturers' forecasts, Q2 passenger car sales are expected to be 5 million units, a year-on-year decrease of 5% and an increase of 4% month-on-month. Fuel vehicles perform weaker, independent new energy vehicle sales are stronger. New energy vehicles in the industry are expected to sell 2.34 million units, a year-on-year increase of 32% and a month-on-month increase of 32%, with a penetration rate of 47%. Among the car companies, BYD, Ideal, and Huawei have strong sales growth, driving the improvement of related supporting company production capacity utilization and performance growth momentum. On the cost side, bulk freight has a slight impact, and it is expected to be digested through economies of scale and internal cost reductions. In terms of valuation, the valuation of the auto parts sector has fallen back to 20 times, and the configuration cost performance is high. Tesla shareholders update the progress of Optimus, which is expected to start limited production in 2025. At the beginning of July's AI conference, it will focus on showcasing large models, computing power, robots, and autonomous driving achievements. The reuse of robots and the vehicle-end supply chain is high, and the progress of the 0-to-1 phase of the industry is expected to drive the market. Recently, under the promotion of policies, various provinces and cities have successively opened tenders for the "vehicle-road-cloud integration" project, and the roadside equipment link is expected to benefit.
Buses: Driven by the dual-wheel drive of domestic demand repair and high-growth exports, the basic face of leading enterprises is upward. According to Bus China and Businfo.net, from January to May 2024, cumulative sales of buses above 6 meters totaled 44,000 units, a year-on-year increase of 54%; exports totaled 22,000 units, a year-on-year increase of 42%. Among them, sales in May were 11,000 units, a year-on-year increase of 33.8%/month-on-month increase of 0.9%; exports were 5,432 units, a year-on-year increase of 49.4%/month-on-month increase of 20.0%. Currently, the bus industry has transitioned from a purely domestic demand-driven cyclical industry to a growth attribute of domestic demand repair and high-growth exports. The overseas market is broad, and domestic companies have strong competitive advantages. The domestic structural optimization and the high-profitability of going abroad are expected to drive domestic corporate profits to a new level, and the industry's basic face is up, which is expected to improve related corporate performance realization.
Investment advice: 1) Automobiles: Preferred [BYD], pay attention to the new car cycle of Huawei's cars [Sokon, BAIC BluePark, Anhui Jianghuai Automobile, Chongqing Changan Automobile]. 2) Commercial vehicles: [Yutong Bus], [China National Heavy Duty Truck Group], [Weichai Power]. 3) Auto Parts: Grasp the Q2 performance and the robot mainline. [Ningbo Tuopu Group], [Jiangsu Bojun Industrial Technology], [Kunshan Huguang Auto Harness], [Railway Motor Dies], [Zhejiang Songyuan Automotive Safety Systems], [Zhejiang Yinlun Machinery], [Jiangsu Xinquan Automotive Trim], [Zhejiang Sanhua Intelligent Controls], [Shanghai Beite Technology], [Wuxi Best Precision Machinery]. 4) Vehicle-road cloud: [Shenzhen Genvict Technologies], [Vanjee Technology], [China Transinfo Technology], [Hangzhou Hopechart IOT Technology Co., Ltd.], and others.
Risk warning: Policy implementation falls short of expectations, and new model launches and industry demand fall short of expectations.