China Specialist, Auto and Industrial Specialist

Victoria Li

Thematic (Sector/Industry)

In the past few months, China's Startup EV brands have been ramping up quickly.  BYD showed marketshare gains in September thanks to newly launched Model Han. However, Tesla might put new pressure on their up trend very soon. Local produced Model Y might be launched in November at the earliest, which might put huge pressure on NIO (NIO.US) and Li Auto's (LI.US) sales in short term. Model 3 sales price has been cut again and getting close to its Chinese competitor models. BYD Han might be under pressure. However, Xpeng (XPEV.US), who's P7 is directly competing with Model 3, has shown  capability of overcoming Model's price cut pressure. We believe XPEV is better positioned to overcome new threats from Tesla in near term.

In the past few months, China's Startup EV brands have been ramping up quickly.  BYD showed marketshare gains in September thanks to newly launched Model Han. However, Tesla might put new pressure on their up trend very soon. Local produced Model Y might be launched in November at the earliest, which might put huge pressure on NIO (NIO.US) and Li Auto's (LI.US) sales in short term. Model 3 sales price has been cut again and getting close to its Chinese competitor models. BYD Han might be under pressure. However, Xpeng (XPEV.US), who's P7 is directly competing with Model 3, has shown  capability of overcoming Model's price cut pressure. We believe XPEV is better positioned to overcome new threats from Tesla in near term. 

China EV:  New Threats from Tesla Coming, Prefer XPEV

Due to the National Holiday, China's September car sales data is not yeat available. However, CAAM estimates that China's passenger vehicle sales in September increased by 7.6% yoy, indicating the sector recovery remains solidly on track.Meanwhile,  September sales data announcements from local leaders, including Geely, BYD, Great Wall and Changan Auto, confirmed that auto demand keeps warming up. In September, Geely (175.HK)auto sales increased by 11% yoy, within which its Lynk&amp;Co sales grew by 38% yoy. Great Wall (2333.HK) reported an 18% yoy sales growth. Changan Auto (000625.CH) reported a 28.6% yoy sales growth. BYD's (1211.HK) sales growth remained weak at 3.6% yoy.Reiterate BUY on Geely.

Due to the National Holiday, China's September car sales data is not yeat available. However, CAAM estimates that China's passenger vehicle sales in September increased by 7.6% yoy, indicating the sector recovery remains solidly on track.Meanwhile,  September sales data announcements from local leaders, including Geely, BYD, Great Wall and Changan Auto, confirmed that auto demand keeps warming up. In September, Geely (175.HK)auto sales increased by 11% yoy, within which its Lynk&amp;Co sales grew by 38% yoy. Great Wall (2333.HK) reported an 18% yoy sales growth. Changan Auto (000625.CH) reported a 28.6% yoy sales growth. BYD's (1211.HK) sales growth remained weak at 3.6% yoy.Reiterate BUY on Geely.

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

<div>With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.</div>

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and conflicts, waiting Trump out until after November. However, Beijing understands the White House’s targeting at China enjoys bipartisan support at this moment, one of the few exceptions of today’s politics in the U.S.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Key $70 support on the MSCI ACWI (ACWI-US) held strong last week, and ACWI-US is now inflecting topside its bullish falling wedge pattern. This bullish price action combined with market dynamics which remain mostly healthy lead us to believe the lows of this recent correction are in. Consumer Discretionary and Manufacturing Sectors continue to be two attractive Sectors that are outperforming globally; we highlight numerous actionable names in today's report.

Key $70 support on the MSCI ACWI (ACWI-US) held strong last week, and ACWI-US is now inflecting topside its bullish falling wedge pattern. This bullish price action combined with market dynamics which remain mostly healthy lead us to believe the lows of this recent correction are in. Consumer Discretionary and Manufacturing Sectors continue to be two attractive Sectors that are outperforming globally; we highlight numerous actionable names in today's report.

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

The existence of the annual cap from BYD Electronics to the BYD group which then sells the masks to the distributors or end customers through BYD Care (a subsidiary of BYD Group), BYD Electronics will see an increase in revenues but not so much of the increase in the margin as BYD Care (the seller of surgical masks) is a subsidiary of <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> rather than BYD Electronics. Among Trump's outperforming Biden in the first Presidential debate, an attempt to make up for the loss, overly bullish investors in China's plan on domestic consumption and surgical masks production, <a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a> share price rose close to 10% today makes an attractive entry point to shorting the stock. Size up your bet!

The existence of the annual cap from BYD Electronics to the BYD group which then sells the masks to the distributors or end customers through BYD Care (a subsidiary of BYD Group), BYD Electronics will see an increase in revenues but not so much of the increase in the margin as BYD Care (the seller of surgical masks) is a subsidiary of BYD (1211 HK) rather than BYD Electronics. Among Trump's outperforming Biden in the first Presidential debate, an attempt to make up for the loss, overly bullish investors in China's plan on domestic consumption and surgical masks production, BYD Electronics (285 HK) share price rose close to 10% today makes an attractive entry point to shorting the stock. Size up your bet!

BYD Electronics (285): Where Is the Margin At?

China

BYD Company Limited, through its subsidiaries, manufactures and sells automobiles. The Company also researches, develops, manufactures and sells batteries, which are applied on mobile phones, cordless phones, power tools and other kinds of portable electronic devices.

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BYD (1211 HK)

China EV: New Threats from Tesla Coming, Prefer XPEV

China's Startup EV brands have been ramping up quickly. BYD showed marketshare gains in September thanks to newly launched Model Han. However,...

Victoria Li

China Auto: Sales Recovery on Track

Positive price momentum for China auto sector. Local leaders' car sales in September increased strongly, indicating sector demand recvoery remains...

Victoria Li

China Macro and Geopolitical Briefing

With only 40+ days left before the Presidential Election in the U.S, China is wisely taking a laissez faire approach to the bilateral issues and...

JL Warren Capital

Global Equity Strategy:

Key $70 support on the MSCI ACWI (ACWI-US) held strong last week, and ACWI-US is now inflecting topside its bullish falling wedge pattern. This...

Vermilion Research

BYD Electronics (285): Where Is the Margin At?

The share price increase of close to 10% today makes a more attractive entry point to shorting BYD Electronics.

Henry Soediarko

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