Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>The rapid ascending Huawei EV ecosystem is threatening everyone except BYD and Tesla. XPEV is the next in line after NIO;</li>
<li>We do view Xiaomi as offering an alternative to Huawei to present a unified IOT user experience. But now is too early to judge Xiaomi’s success and XPEV’s role;</li>
<li>We cut the TP from US$24.3 to US$18 and maintain BUY.</li>
</ul>


The rapid ascending Huawei EV ecosystem is threatening everyone except BYD and Tesla. XPEV is the next in line after NIO;
We do view Xiaomi as offering an alternative to Huawei to present a unified IOT user experience. But now is too early to judge Xiaomi’s success and XPEV’s role;
We cut the TP from US$24.3 to US$18 and maintain BUY.


[XPeng Inc. (XPEV US, BUY, TP US$18) Target Price Change]: Does Xiaopeng Need Xiaomi to Survive?

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We summarize the Oct 2023 leading indicators as below, including number of leads, customer flows, and new orders generated, for Tesla, NIO, Li Auto, Xpeng, BYD and Aion.</li><li>Note that such data are based on a sample size of 96 stores (15- 18 stores for each brand) in 15 major cities in China.</li><li>In general, new orders per store for most brands have been rising MoM since Apr 2023, which have been consistent with our prior projection that NEV market share in China could rise sequentially for the remainder of the year. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We summarize the Oct 2023 leading indicators as below, including number of leads, customer flows, and new orders generated, for Tesla, NIO, Li Auto, Xpeng, BYD and Aion.Note that such data are based on a sample size of 96 stores (15- 18 stores for each brand) in 15 major cities in China.In general, new orders per store for most brands have been rising MoM since Apr 2023, which have been consistent with our prior projection that NEV market share in China could rise sequentially for the remainder of the year. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Auto Sector – Improving Leading Indicators Imply Strong 4Q23

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> announced in-specie dividends of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> (US$15bn+) in 2021 and <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> (US$20bn) in 2022.</li>
<li>With the <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.</li>
</ul>



Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.

Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.


Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

<ul><li>We summarize the Oct 2023 price discounts at dealers for major automakers in this report.</li><li>Note that such discounts for each automaker are calculated based on weighted average of Sep 2023 retail sales volume for each model, as Oct retail sales volume data have not been released yet.</li><li>Discounts at dealers for most brands continued to widen MoM in Oct 2023.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We summarize the Oct 2023 price discounts at dealers for major automakers in this report.Note that such discounts for each automaker are calculated based on weighted average of Sep 2023 retail sales volume for each model, as Oct retail sales volume data have not been released yet.Discounts at dealers for most brands continued to widen MoM in Oct 2023.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Auto Sector – Oct discounts widened after 3Q23 earnings beat

<ul><li>China’s passenger-vehicle (PV) retail sales volume rose 6% YoY and 3% MoM to 1.97mn units in Sep 2023, 4% higher than our prior forecast.</li><li>YTD retail sales volume rose 4% YoY. Wholesale volume rose 7% YoY and 9% MoM to 2.49mn units in Sep 2023, the best Sep in history, and 9% higher than our prior forecast.</li><li>Wholesale volume rose 7% YoY (or +1.14mn units YoY) YTD, all aided by 67% YoY growth (or +1.14mn units YoY) of exports. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China’s passenger-vehicle (PV) retail sales volume rose 6% YoY and 3% MoM to 1.97mn units in Sep 2023, 4% higher than our prior forecast.YTD retail sales volume rose 4% YoY. Wholesale volume rose 7% YoY and 9% MoM to 2.49mn units in Sep 2023, the best Sep in history, and 9% higher than our prior forecast.Wholesale volume rose 7% YoY (or +1.14mn units YoY) YTD, all aided by 67% YoY growth (or +1.14mn units YoY) of exports. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Auto Sector – Strong 4Q23 sales mixed with rising competition

China

NIO Inc. manufactures and sells automobiles. The Company offers electric vehicles and parts, as well as provides battery charging services. NIO serves customers worldwide.

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NIO (NIO US)

[XPeng Inc. (XPEV US, BUY, TP US$18) Target Price Change]: Does Xiaopeng Need Xiaomi to Survive?

Huawei's EV ecosystem poses a threat to many, except BYD and Tesla. XPEV follows NIO, while Xiaomi's success and XPEV's role are yet to be...

Blue Lotus Research Institute

China Auto Sector – Improving Leading Indicators Imply Strong 4Q23

We summarize the Oct 2023 leading indicators as below, including number of leads, customer flows, and new orders generated, for Tesla, NIO, Li...

CMB International

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

Tencent could make it a hat-trick of special in-specie dividend distributions. After JD.com and Meituan, Kuaishou could be next. Or it could be...

Brian Freitas

China Auto Sector – Oct discounts widened after 3Q23 earnings beat

Note that such discounts for each automaker are calculated based on weighted average of Sep 2023 retail sales volume for each model, as Oct retail...

CMB International

China Auto Sector – Strong 4Q23 sales mixed with rising competition

China’s passenger-vehicle (PV) retail sales volume rose 6% YoY and 3% MoM to 1.97mn units in Sep 2023, 4% higher than our prior forecast.

CMB International

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