Source: China Fund Daily
Tesla, Inc. set off a price war all over the world, and the midfield war of new energy vehicles officially began.
In the Hong Kong stock market, from BYD, which has been listed for 20 years, to the new forces that have only landed intensively in the past two years, they are experiencing a situation from hot pursuit in the market to differentiation after intensified competition. Tesla, Inc. is like a catfish, allowing domestic legions to withstand multiple pressures such as increased competition, withdrawal of subsidies and rising battery prices, but also to deal with the most fierce round of price war.
The views of internal and external institutions on the plate are also highly divided. Buffett significantly reduced his stake in BYD in half a year, far exceeding market expectations, while domestic funds chose to substantially increase their positions at the low point of the stock price. In the new car-building forces that do not see a clear winner or loser, the position signals of domestic and foreign institutions are still highly divided.
The competition pattern is one super and many strong.
After years of competition, domestic new energy vehicles began to form a "one-super-multi-strong" pattern.
With booming production and sales, coupled with the rapid expansion of production capacity, BYD's annual sales of new energy vehicles reached 1.8635 million in 2022, an increase of 208.64 percent over the same period last year, far exceeding the original target of 1.5 million vehicles and surpassing Tesla, Inc. 's global delivery of 1.3139 million vehicles, becoming the top seller of new energy vehicles in the world.
Since the disclosure of overseas orders in July 2022, BYD has sold a total of 55900 vehicles overseas, and the company recently announced that it plans to account for 40% of India's sales in the future, which has also ignited market expectations for export space.
In addition to the showdown between millionaire sales giants, there are a large number of new car-building forces in the Hong Kong stock market, such as ideal, NIO Inc., XPeng Inc., Zero and other car companies, which delivered more than 100000 vehicles for the whole year of 2022. Among them, Li Auto Inc. ranks first among the new forces on the market with 133200 vehicles. In December 2022, Li Auto Inc. topped the list of new forces with sales of 21000 vehicles. Ideally, the delivery of the two new cars exceeded 10,000 in that month, and new cars will be launched in the first half of the year. If the new car is on the market on time, Li Auto Inc. is likely to be the first "car-building new power" car company to come out of losses.
However, under the current market pattern that has not yet been finalized, there are variables in the position and even the survival of the new forces. NIO Inc. ranked second with annual sales of 122000 vehicles in 2021. Recently, affected by the epidemic, NIO Inc. took the initiative to reduce car delivery in the fourth quarter, delivering 15800 vehicles in December 2022, which was lower than market expectations.
The stock price recovers with twists and turns.
The trend of different stocks reflects the market's judgment of the competitive pattern.
At the beginning of the epidemic, when the global production capacity of new energy vehicles was released and the penetration rate was rising rapidly, adding loose liquidity and optimism, many new energy car companies reached the peak of their share prices at that time. From March 2020 to January 2021, BYD's share price rose more than sixfold.
The new car-building forces initially listed mainly in the United States, more than landing on the Hong Kong Stock Exchange after 2021, and they failed to catch up with the wave. With the intensification of competition among car companies, coupled with the change of market style preferences, and many new forces are still operating at a loss, Hong Kong new energy vehicles have begun a long process of adjustment.
The stock price peaked first in XPeng Inc., which went public in July 2011 and hit an all-time high in December of the same year. In 2022, Li Auto Inc., NIO Inc. and BYD peaked successively in June of the same year. Among them, XPeng Inc. is the most weak, withdrawing 80% from the high so far, becoming the largest new energy vehicle to withdraw after the listing of the Stock Exchange. After months of decline in sales, XPeng Inc. delivered 121000 vehicles in 2022 and dropped nearly 30% in December compared with the same period last year, which is in a state of lag compared with NIO Inc. and ideal.
However, since Hong Kong stocks bottomed out and rebounded at the end of October 2022, new energy vehicles have also begun to follow the market.
The performance of the market since the beginning of the year reflects the current sales situation of domestic new energy vehicles-BYD, the leader in sales, led by BYD with an increase of nearly 20 per cent, followed by ideal and NIO Inc. with an increase of 17 per cent, while XPeng Inc. rose slightly and fell with zero running.
The zero run that has recently landed in the Hong Kong stock market is still in a broken state. Fundamentally, 111000 zero-running cars will be delivered in 2022. Due to the lack of follow-up sales of popular models, less than 8000 cars were delivered in December, which is also a gap from the annual target of 200000.
On January 6th, Tesla, Inc. China announced a price reduction, which once caused the domestic legions to fall collectively, and their pressure increased a lot.
The latest quarterly sales gross margin data show that Tesla, Inc. is as high as 26.38%, and the high gross rate gives him the strength to cut prices. BYD has only 15.89%, and Li Auto Inc., the highest among the new forces, is 18.90%, which is also significantly different from Tesla, Inc..
Huatai said that since the Tesla, Inc. price reduction, including XPeng Inc. P7, G9, NIO Inc. ES6, ET5, ideal L7, L8, BYD Seal and other users in the same price range have been shaken, especially the positioning of younger models. After Tesla, Inc. announced that the European and American markets would follow the price cuts on January 13th, the market expected increased competition to reduce profit margins, causing the share prices of new power car companies to fall.
At the same time, under the impact of the price war, the market will pay more attention to the incremental space and profit margin of re-energy vehicles. For BYD, which has been criticized by the market as "easy to sell but difficult to make money", domestic institutions are also paying attention to whether its sales and performance can be realized continuously.
There are serious differences between domestic and foreign institutions
It is difficult for domestic and foreign institutions to agree on the prospects of new energy vehicle companies.
Take BYD as an example, Buffett's massive reduction of holdings is the biggest negative for BYD at the moment. In seven reductions from August 2022 to early 2023, the number of shares held by Berkshire and its affiliates in Hong Kong fell from 220 million shares to 153 million shares, with a shareholding ratio of 20.04 per cent to 13.97 per cent. The speed and scale of the reduction far exceeded the market expectations.
The market believes that there are three reasons for the reduction: first, to realize the long-term investment value. Buffett has invested in BYD for 14 years. Buffett bought 225 million shares of BYD at HK $8 per share in September 2008, costing HK $1.8 billion. The current reduction alone far exceeds the investment principal.
Second, Buffett may see the risk that BYD faces growth bottlenecks. With the rapid increase in production and sales of BYD, the market share of domestic new energy vehicles has exceeded 30%; after further intensified competition, the rising space of market share may shrink, and without the premise of high-end models to expand profit space, the improvement of profit margins still needs to be broken through.
The third is to choose to sell from the perspective of geopolitical risk. Berkshire is likely to focus on the US in the future, making it more cautious about overseas investment.
Affected by the sell-off, Hong Kong shares have retreated 30% since their peak in June 2022, even though BYD's sales figures have been rising. Blackrock, another large foreign institution, also reduced its stake in BYD several times from July to November 2022.
Mainland funds choose to increase their positions at every bargain. In the third quarter of 2022, mainland funds significantly increased their holdings in 25.2 million BYD Hong Kong shares, accounting for about 2.3 per cent of current shares. The increase in holdings is even higher than the 13 million shares Buffett reduced in the same period, but the market influence is far less than that. However, considering the overall investment environment of Hong Kong stocks in 2022, BYD's performance is not too bad, compared with the ideal that the stock price peaked almost at the same time and NIO Inc., the retracement was even greater in the same period.
Under the pressure of price reduction, compared with the already profitable BYD, the new forces need to find a better way to solve the balance between pricing and profit space. But there are signs that institutions are far less pessimistic, even when share prices are falling rapidly. In the case of Li Auto Inc., when share prices were still falling in the third quarter of 2022, hedge funds that disclosed their positions increased their holdings instead, increasing their holdings in corresponding US stocks from 54.09 million shares to 63.1 million shares, an increase of 16.65 per cent.
Even XPeng Inc., whose recent performance was weak, saw hedge funds increase their holdings by 19.44 per cent to 35.99 million shares in the third quarter, accounting for 4.48 per cent. However, it is the mainland funds that are singing the opposite tune this time. The ratio of mainland funds to the reduction of XPeng Inc. 's Hong Kong shares is relatively high, with their holdings falling by about 60% to 1.8 million shares in the third quarter, but the impact is relatively small, accounting for only 1.54% of the outstanding shares.
Edit / Corrine
