With the recent unexpected 50 basis point rate cut by the Federal Reserve and a combination of positive policies in China, the Hong Kong stock market has seen a long-awaited big surge.

Among them, driven by the frequent transmission of positive factors in the automotive sector, $Electric Vehicles (LIST22910.HK)$ have set off a wave of major uptrends, with an overall increase of over 11% since September, showing a pleasing upward trend!

Two stocks surged by 30%, is the car market's "Gold September and Silver October" coming?

As of the writing, among the new energy vehicle stocks $NIO-SW (09866.HK)$Please use your Futubull account to access the feature.$XPENG-W (09868.HK)$ 本月已累涨约30%， $LEAPMOTOR (09863.HK)$Please use your Futubull account to access the feature.$GEELY AUTO (00175.HK)$Please use your Futubull account to access the feature.$LI AUTO-W (02015.HK)$ 同样有累涨超20%优异表现， $XIAOMI-W (01810.HK)$ The stock price has also hit a new high in the past three years, with an accumulated increase of over 6% recently. $GWMOTOR (02333.HK)$and$BYD COMPANY (01211.HK)$ There is also a significant upward trend.

Driven by the implementation of national and local consumption promotion policies, the successive launch of car marketing activities, and the large number of new car models being launched, the consumer's wait-and-see attitude under price wars has been effectively alleviated, leading to a gradual recovery of auto consumption.

According to data from the China Passenger Car Association, from September 1 to 15, retail sales of passenger vehicles reached 0.828 million units, an 18% year-on-year increase and a 12% month-on-month increase. Among them, retail sales of new energy passenger vehicles reached 0.445 million units, a 63% year-on-year increase and a 12% month-on-month increase. In addition, from January to August this year, China's auto industry has sold a cumulative total of 6.016 million new energy vehicles, a 35.3% year-on-year increase.

Further analysis from the China Association of Automobile Manufacturers indicates that the country has introduced the 'old-for-new' policy and will further subsidize around ninety percent of the scrappage renewal funds. This demonstrates a good consumption promotion effect, guiding various regions to promote corresponding 'old-for-new' incentive policies and promptly issue implementation guidelines. With the successive introduction of 'old-for-new' policies in various regions, it is expected that the initial effects of local subsidy policies will be very good, which will also bring better promotion for the sales volume of 'Golden September and Silver October' in 2024.

On the international front, during the visit of the Chinese Minister of Commerce to Europe, it is reported that the European Union will postpone the vote on imposing tariffs on imported electric vehicles from China. According to related reports, three EU diplomats stated that the relevant meeting scheduled by the EU on September 25 for voting has been canceled, and a new voting date has not yet been determined.

Market analysis indicates that the postponement of this vote may provide both China and the EU with more time for in-depth communication, exploring reasonable solutions, and may mean a relaxation in the trade dispute between the two parties.

In response, Sinolink Securities pointed out that in September, various provinces have successively issued replacement policies in response to the national scrappage renewal policy, encouraging consumers to trade in old vehicles for new ones, effectively boosting new car sales. Boosted by policy subsidies, the traditional sales performance of 'Golden September' in the auto market is impressive, with the incremental potential of new energy products exceeding historical expectations. In addition, on September 19, the Federal Reserve cut interest rates by 50 basis points, officially kicking off a global interest rate reduction cycle, which is also a positive factor for auto market consumption. It is expected that this year's strong sales performance in 'Golden September and Silver October' will exceed expectations.

"Great companies frequently act", Xpeng and Nio focus on sub-brands

Li Auto continues to 'lead from a distance,' and Li Auto's excellent sales also support its stock price rebound. In the first half of the year, Li Auto won the champion in revenue, net profit, gross profit, and sales volume, and in the China auto market data for the week of September 16 to 22 just released, Li Auto led the new forces in car manufacturing for 22 consecutive weeks with a sales volume of 0.012 million units, surpassing luxury brands for the first time including Mercedes-Benz, BMW, and Audi, ranking only below industry giant Tesla.

Tianfeng Securities released a research report statingLi Auto Inc."Buy" rating, the company's adjusted net income for 2024/2025 is expected to be 10.5/14.8 billion yuan (previously 13.9 billion yuan in 2024).

The bank believes that concerns about future consumer momentum at the trading level led to an oversold situation after the financial report. In fact, automotive consumption showed a slight recovery trend in July under the drive of the old-for-new policy. The continuity of market demand after this is indeed uncertain, but the company's fundamentals are expected to gradually improve in Q3-Q4. In addition, the accelerated introduction of subsidies and preferential policies in various regions is expected to enhance the overall demand momentum. The bank predicts that the gross margin of autos is expected to be further released, determining that LI Auto Inc. is expected to release elasticity from gross profit and net income in the second half of the year.

Faced with industry competition, Xpeng and Nio have chosen to launch lower-positioned sub-brands.

On August 27, Xpeng's MONA M03 was launched, with three models released at prices ranging from 1.198 million yuan to 1.558 million yuan. It is reported that within 48 hours of its launch, the Xpeng MONA M03 quickly exceeded 30,000 units; at the same time, on September 19, Nio launched the brand new sub-brand, Lixiang L60, with prices ranging from 1.499 million to 2.359 million yuan. Nio Chairman William Li pointed out that the current Lixiang's order situation has exceeded expectations, and the supply chain for Lixiang L60 is prepared to deliver 0.01 million units by the end of this year, aiming to reach a monthly delivery of 0.02 million units next year.

Looking at the plans of the three new forces, Xpeng, Li Auto, and Nio, Ideal Auto, rooted in the market of over 0.3 million units, has launched the Ideal L6 in the 0.25 million yuan segment. Xpeng and Nio are also betting on their second brands, with great potential, opting for extreme cost-effectiveness while opening up a downward brand strategy, which is likely a blow to other brands. Ideal Auto, although not overly concerned about sales volume at this stage, it is still uncertain whether their pure electric SUV next year can be successful. Ideal's top management openly stated that they have "survived the most difficult quarter." This year's sales target has been adjusted to deliver a total of 0.5 million units throughout the year.

How to seize this wave of new energy vehicle investment opportunities?

In summary, with support from sales volume, policies, and funding, the new energy vehicle sector has already positioned itself at the forefront and, with the arrival of the strong season for car sales in September and October, the monthly sales and market share of new energy vehicles may reach new heights.

The industry continues to be bullish on the new energy auto industry.

According to the research reports from Huaxin Securities, the intensification of the old-for-new policy stimulates demand, with some enterprises on the supply side beginning to reduce capital expenditure, optimizing the supply-demand structure marginally. The industry chain profit in 2024 is expected to improve quarter by quarter, with valuation possibly recovering. The fundamental turnaround still requires waiting for the clearing of production capacity. Continue to prefer directions that are likely to contribute excess returns, bullish on liquid cooling, solid state battery, battery materials such as α variety, robots, and other directions.

Some institutions also believe that driven by national policies promoting consumption and car manufacturers' preferential sales promotions, the continuous release of new car models, and the sustained enthusiasm in the automotive market, market performance continues to improve. The sales growth of new energy vehicles continues to maintain a relatively high level. With the continuous manifestation of various stimulating policy effects, car sales are expected to continue to climb, with annual sales expected to reach a historic high.

China Merchants International Securities published a report stating that intensified subsidies assist in promoting the peak season effect, with high elasticity in the economic new energy vehicles sector, benefiting BYD and Geely Auto the most. In addition, the capacity of the A-class car market is close to 8 million vehicles, with a relatively low penetration rate of new energy vehicles. Following the BYD e5 Plus, Geely's Silver Galaxy E5, and Xpeng's Mona 03 and other new car models have successively taken off. A-level pure electric vehicles have high cost-effectiveness and high intelligence advantages, starting to aggressively compete for market share in the fuel vehicle market on a large scale. The report points out that intensified policies and the peak season effect are improving the fourth-quarter business climate, bullish on BYD and Geely, benefiting from the policy dividends and the resonance of the new vehicle cycle. In addition, the success of the Xpeng Mona new car enhances the product cycle certainty, moving the valuation basis earlier, with the group's target price raised from 36 Hong Kong dollars to 50 Hong Kong dollars.

Editor/rice