With the recent unexpected 50 basis points rate cut by the Federal Reserve and a combination of favorable policies in China, both the Hong Kong A-share market and Chinese concept stocks have attracted a large amount of capital inflow, directly triggering an epic surge in bullish sentiment. Whether it's the Hang Seng Tech Index in Hong Kong, the Chinext Price Index in A-shares, or the Nasdaq Golden Dragon Index, all have seen a long-awaited significant increase. Many representative large-cap stocks in the market have also experienced explosive surges.

After a short period of frenzied growth, the Hong Kong A-share market has experienced a major adjustment.

On October 8th, the Hong Kong stock market underwent a deep adjustment, with significant outflows of funds from individual stocks. The Hang Seng Tech Index plummeted by 12.82%. On October 9th, the A-share market also entered an adjustment phase, with the Shanghai Composite Index, Chinext Price Index, and other key indices falling by 6.62% and 10.59% respectively.

Faced with the first major adjustment in this round of the market, many investors have expressed concerns.

In response to this, Zhang Yidong, Chief Global Strategy Analyst of the Industrial Securities, mentioned that the shaking in the Hong Kong stock market precisely confirms the reversal logic, rather than being a temporary rebound. In October, it is expected that both the Hong Kong and A-share markets will shift from the recent short-squeeze rebound to a more sustainable volatile reversal.

From an investment perspective, several fund industry professionals have also indicated that the momentum of this round of the market is relatively abrupt, with volume speed also quite fast, and there may be increased market volatility in the future. During this process, it is still crucial to focus on sectors with better fundamentals, such as the automotive sector.

It is known that there was a new wave of surges in the automotive sector in September, with an overall increase of over 20% during that month. How to seize this new energy vehicle investment opportunity?

The author believes that the logic of selecting stocks with better fundamentals still applies to focusing on individual stocks. For example, monthly delivery volume, as the most intuitive data for observing a company's fundamentals, has become a key measure for investors to evaluate new opportunities. For instance, it may be a good observation sample to look at the recent rapid report on production and sales in September by Chongqing Sokon Industry Group Stock (601127.SH).

1. Sokon Industry Group Stock Continues to Lead the Way in Deliveries Among Domestic New Energy Companies.

According to the production and sales data for September successively released by major auto manufacturers, many companies achieved year-on-year growth in sales or deliveries.

Among them, BYD, the leader in new energy vehicles, saw its sales in September exceed 0.419 million units, reaching a new high, setting the record for single-brand monthly sales volume in China's auto market.

Relying on the popular models, Sokon Industry Group Stock also delivered impressive results. According to the company's production and sales data, the sales of new energy vehicles in September were 0.0374 million units. As of September 30, Sokon Industry Group Stock's cumulative sales of new energy vehicles in the first three quarters reached 0.3167 million units, a year-on-year increase of 364.23%.

For emerging brands, Lixiang Automotive topped the list of new car deliveries in the month, delivering 0.0537 million new cars. The ranking of the second-tier emerging electric vehicle manufacturers continues to change. Apart from ZEEKR, many emerging brands including Xiaopeng, Zeekr, and NIO had sales clustered between 0.02-0.022 million units in September.

It is worth noting that Sokon Industry Group Stock not only ranks high in horizontal comparisons of delivery volumes in September in the industry but also stands out significantly in the vertical comparison of year-on-year growth rates, showing a substantial increase in growth.

Data shows that Sokon Industry Group Stock's new energy vehicle sales in September grew by 265.09% year-on-year. In comparison, the delivery volume of LI Auto increased by 48.9% year-on-year, while Xiaopeng, NIO, and other companies had delivery growth rates ranging from 30-40%.

Despite facing a competitive market environment in the new energy vehicle industry, Sokon Industry Group Stock has shown outstanding performance in both delivery volume and delivery growth rate. The reason for achieving such remarkable results has many successful experiences worth learning from.

Behind the leading sales volume, what did Chongqing Sokon Industry Group Stock do right?

In my opinion, it can be interpreted from various aspects such as product positioning, product strength, research and development capabilities, and operational efficiency.

Firstly, precise product positioning is a major consensus in the market for Chongqing Sokon Industry Group Stock, especially for its Weltmeister brand.

In terms of target customers, Weltmeister's main vehicle models can meet the needs of different consumer groups. For example, Weltmeister's new M5 precisely targets young and individualistic people, while Weltmeister's new M7 focuses more on the needs of family users, and Weltmeister M9 focuses on consumers pursuing high-quality living and technological experiences. This also explains why Weltmeister's new M5 and new M7, under the same starting price, did not compete with each other, but achieved resonance development by focusing on different user groups and segmenting different consumer markets.

In terms of pricing, looking at the current situation in the Chinese passenger vehicle market, driven by changes in the domestic economy and consumer preferences, the market above 200,000 new energy vehicles continues to eat up the market share of low-end cars, maintaining rapid growth. Meanwhile, the Weltmeister M5, M7, M9 series target the mid-to-high-end market of 200,000 to 500,000.

In terms of technology route, Weltmeister keenly identified the demand gap in the consumer market for extended-range + pure electric SUV models, accurately positioned in this segment market, and in direct competition with traditional luxury brands and some emerging forces, took the lead in seizing market share.

Secondly, strong product strength provides powerful support for the sales growth of Chongqing Sokon Industry Group Stock.

As a product jointly created by Chongqing Sokon Industry Group Stock and Huawei, Weltmeister has received comprehensive support and resource tilt from both parties in product research and development, marketing strategies, and channel construction. Born with the atmosphere of being a 'star', Weltmeister naturally has a deep moat in brand strength compared to its peers.

In addition, compared to peers, the WENJIE series models have shown outstanding performance, quality, technology, and intelligence. This has allowed them to gain a significant advantage in competition with similar models, highlighting their cost-effectiveness and thus winning more favor from consumers.

The continuous improvement of product strength is inseparable from Chongqing Sokon Industry Group's continuous focus on product research and development innovation.

Chongqing Sokon Industry Group is currently in a leading position in various aspects such as three-electric technology, extended-range technology, electronic and electrical architecture, and vehicle platform. For example, the Sokon Super Extended Range 5.0 system has gone through eight years of continuous innovation, achieving five iterations. The system has achieved high integration, platformization, lightweighting, and made significant breakthroughs in efficiency, eco-friendliness, and intelligence.

In terms of efficiency, as more and more car companies adopt extended-range architectures, the competition in the extended-range platform technology is becoming more intense. According to the Li Auto official website data, the thermal efficiency of the Li Auto L series internal combustion engine is about 40.5%. Changan Shenlan has even released a super extended-range technology platform with a fuel-to-electricity conversion rate of 3.63 kWh/L. In comparison, the Sokon Super Extended Range 5.0 system achieved a 20% increase in power performance and a 5% increase in fuel-to-electricity conversion rate. Its thermal efficiency has reached 45%, and the fuel-to-electricity conversion efficiency has reached 3.65 kWh/L, equivalent to generating 3.65 degrees of electricity per 1 liter of fuel.

In terms of intelligence, the Sokon Super Extended Range 5.0 system can automatically recognize over 1100 driving scenarios and user habits. Faced with various complex road conditions and a temperature range of -40°C to 60°C, it can achieve precise matching through intelligent controls such as rule calculations, neural algorithms, and global optimization. The system achieves unnoticed power generation by the extender, with NVH performance better than other integrated extended-range systems in the industry by 2 to 4 dB(A), and the difference between pure electric and extended-range NVH is ≤1 dB(A).

Based on its technological capabilities, Chongqing Sokon Industry Group has also gained wide market recognition. It is understood that Sokon's extender business has cooperated with 12 industry partners. In the first quarter of 2024, Sokon's extender installation volume ranked first in the industry, with a cumulative sales volume of nearly 0.3 million from January to August, and a market share exceeding 40%.

Coupled with the company's leading strength in delivery within the industry, it ensures the delivery capability of its popular models, laying the foundation for the continued hot sales of popular models.

For car companies, the seemingly sweet burden of explosive orders and delayed deliveries can have a significant impact. The slow pace of capacity climbing and excessively long new car delivery cycles may lead to the brand's huge order volume backfiring at any time on brand popularity. Compared to brands that often require months of waiting time, the delivery cycle of the WENJIE series may attract consumers more.

Behind this, it is inseparable from the strong smart manufacturing system support of Chongqing Sokon Industry Group Stock. It is understood that Chongqing Sokon Industry Group Stock's super factory uses intelligent technology to achieve the interconnection of production equipment and data in the production process, with over 3,000 intelligent robots collaborating, 100% automation in key processes, leading the industry in using the ultra-large smart die-casting unit, achieving industry-leading production efficiency, and realizing 'flexible, transparent, automatic, interconnected, and intelligent' manufacturing of vehicles. At the same time, equipped with world-class blue light detection and robot online detection, the measurement accuracy is leading in the industry, achieving real-time data management throughout the entire process and detailed management for each vehicle, empowering the high-quality delivery of products.

Third, the short and long-term growth logic is clear, analyzing the true value of Chongqing Sokon Industry Group Stock.

From an investment perspective, there are highlights in the short and long term for the automotive sector's growth value.

In the short term, as mentioned earlier, recent policy stimuli combined with interest rate cuts have led to a sustained rebound in the Hong Kong and A-share markets. Despite entering a correction phase after sharp increases, China Securities Co., Ltd. believes that based on factors such as policy triggers, valuation levels, improved sentiment, and external environmental impacts, the downward trend of the A-share market has reversed, the bottom has been clearly identified, and a new cycle of asset price increases has officially begun. Sectors like complete auto vehicles with superior fundamentals and improving operations still have room for growth after the end of the bearish market sentiment.

In addition, in September, various provinces successively released replacement policies in response to the national scrappage and renewal policy, encouraging consumers to trade in old vehicles for new ones, effectively boosting new car sales. With policy subsidies, the traditional strong September sales performance in the auto market has been impressive, with new energy product increments exceeding historical expectations. With the auto industry's favorable 'Strong September' situation, major brokerages are also very optimistic about 'Silver October.' Sinolink Securities released research reports forecasting that the sales volume during the strong September and Silver October peak season in 2024 will exceed expectations, and the investment opportunities in the automotive sector will increasingly exhibit structural characteristics.

Looking at the long term, during the China Commerce Minister's visit to Europe, the European Union will postpone the vote on imposing tariffs on imported electric cars from China.

Market analysts state that the postponement of this vote may provide more time for in-depth communication between China and Europe, exploring reasonable solutions and may imply a moderation in the trade dispute between both parties. This has given Chinese new energy car manufacturers, represented by Chongqing Sokon Industry Group Stock, more time to adjust export strategies, enhance product competitiveness, and alleviate short-term market pressures. From a deeper perspective, this can also provide more time for Chinese new energy car manufacturers to pursue international partnerships, optimize supply chains, and achieve long-term global development.

Furthermore, under the promotion of national policies such as 'Several Measures to Support Large-scale Equipment Renewal and Consumer Goods Trade-ins,' the continuous release of new car models, combined with the sustained demand for car purchases, is expected to drive continuous growth in sales of electric vehicles.

Faced with the dual drive of policies and demand, as a leading player in the new energy automotive sector, the company is more likely to benefit from the industry growth dividends.

Specifically, with the continuous launch of multiple products such as the M5, M7, and M9 models under the Wisun brand, the company meets the needs of different consumer groups while also maintaining the brand's continuous exposure and popularity in the market, demonstrating Sokon's efficient vehicle update speed and market feedback mechanism. Against the backdrop of the "speed competition era" in the current new energy automobile industry, this better maintains its competitiveness.

In addition, according to an announcement made by Sokon on the evening of the 10th, it plans to acquire 100% equity of Longsheng New Energy, the owner of Chongqing's "Super Factory", for a total price of 8.164 billion yuan. This means that Sokon will gain ownership of the Super Factory. This also signifies that Sokon will be able to extend its industry chain upwards, strengthening the supply chain security. Subsequently, with further solidification of Sokon's delivery capabilities, there is the potential to further boost product sales, effectively reduce the per-unit fixed cost, achieve operational scale effects, and improve the company's profit margin.

Overall, the performance in the first three quarters has confirmed Sokon's growth potential. With the arrival of the peak sales season towards the year-end, optimizing product structure and driving profitability through scale effects, Sokon is more promising in the fourth quarter, and has also gained recognition from professional institutions.

Cinda Securities stated that after the rapid overall market rise and valuation recovery since the end of September, it is currently recommended to continue overweighting the automobile sector. In terms of individual stocks, it is suggested to focus on leaders in segmented tracks with high performance and growth certainty, continuously strengthening competitive advantages, and a persistently improving competitive landscape, such as Sokon benefiting from optimization of the landscape and vigorous new product launch cycle.

Founder Securities also indicated that it is expected for Sokon's gross margin and net profit to continue rising due to the structural adjustment of Wisun products, growth in sales volume of high-value products, and enhanced operational management to improve overall efficiency. Following the continuous increase in the production volume of Wisun M7 Pro and Wisun M9 five-seater variants, as well as the potential release and launch of other new products, the company's profitability is expected to scale up. Based on this, Sokon is rated as "strongly recommended".

IV. Conclusion

In the business domain, there is a concept called the "flywheel effect", referring to a sustainable and virtuous business operation model that enterprises find. For Sokon, the rotation of this flywheel is evidently built on the continuously developed high-quality innovative products.

In other words, after the flywheel of Chongqing Sokon Industry Group stock rotates, it can continuously generate new profit growth points, achieve sustainable development. Based on this, Chongqing Sokon Industry Group stock will demonstrate gathering advantages in key areas such as investor confidence, talent attraction, and brand influence, thereby accelerating the positive cycle of corporate operation.

Therefore, it can be foreseen that in the future, Chongqing Sokon Industry Group stock will be more recognized and achieve more prominent performance in both the new energy automotive industry and the capital markets.