China Specialist, Auto and Industrial Specialist

Victoria Li

Thematic (Sector/Industry)

<ul>
<li>China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions from regional Covid lockdown/restrictions</li>
<li>Xpeng ranked No.1 among EV brands by delivering 15,613 new cars in November. P5 delivery is ramming up.</li>
<li>Zeekr 001 delivered 2,012 new cars in November, in line with latest market expectation.</li>
</ul>


China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions from regional Covid lockdown/restrictions
Xpeng ranked No.1 among EV brands by delivering 15,613 new cars in November. P5 delivery is ramming up.
Zeekr 001 delivered 2,012 new cars in November, in line with latest market expectation.


Research from EqualOcean, EqualOcean

EqualOcean

Research from EqualOcean

EqualOcean is an investment research firm and information service provider focusing on China's Technology, Automotive and Consumer Internet sectors. With unique research and due diligence methodology, we provide tailored insights into a wide range of industries and companies, empowering our clients' value-added decisions.

Founded in 2014, EqualOcean is headquartered in Beijing and has offices in Shanghai, Shenzhen and New York.

<ul><li>An eventful year - The semiconductor shortage is both accidental and inevitable</li><li>Dawn in 2022 - The crunch is likely to be relieved in 2022 but it will take years to fully meet the industry's needs. </li><li>Favored electric cars - Albeit auto brands can't get components on time, many of them are now prioritizing EV production. </li></ul>

An eventful year - The semiconductor shortage is both accidental and inevitableDawn in 2022 - The crunch is likely to be relieved in 2022 but it will take years to fully meet the industry's needs. Favored electric cars - Albeit auto brands can't get components on time, many of them are now prioritizing EV production. 

Tesla Can Deal with Supply Chain Shortage, Unlike Most Chinese Peers

<ul>
<li>Despite a great Q3 overall, Tesla in China sees demand reduce as competitors begin to catch up.</li>
<li>Domestic brands are gaining on Tesla's share of Chinese EV market</li>
<li>More players both new and old - Nonetheless, as other emerging players begin to throw their hat in the ring like Xiaomi, Evergrande Auto, as well as international makers like Volkswagen and Toyota, there could be less room for Tesla to dominate demand.</li>
</ul>


Despite a great Q3 overall, Tesla in China sees demand reduce as competitors begin to catch up.
Domestic brands are gaining on Tesla's share of Chinese EV market
More players both new and old - Nonetheless, as other emerging players begin to throw their hat in the ring like Xiaomi, Evergrande Auto, as well as international makers like Volkswagen and Toyota, there could be less room for Tesla to dominate demand.


Tesla's Record Revenue in Q3 Reflective of China's Solid EV Foundation

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> are among the largest underweight holdings among active EM investors</li>
<li>Combined with this, both stocks are underowned compared to peers.  Relatively large index weights haven't been enough to lure active managers to invest in the numbers we might expect.  </li>
<li>Among existing holders, conviction levels are low, with only a small number of managers holding either stock as a leading weight.</li>
</ul>



Meituan (3690 HK) and NIO Inc (NIO US) are among the largest underweight holdings among active EM investors
Combined with this, both stocks are underowned compared to peers.  Relatively large index weights haven't been enough to lure active managers to invest in the numbers we might expect.  
Among existing holders, conviction levels are low, with only a small number of managers holding either stock as a leading weight.


Meituan Dianping & Nio Inc:  The Definitive EM Underweights

<ul>
<li>Auto supply chain issue, including chip shortage, might be worse in 2022E. Local brands might keep gaining market share due to their higher localisation rates</li>
<li>NEV models would continue gaining market shares as they are affected less by chip shortage and more cost friendly when global fuel cost surges</li>
<li>Among three listed EV players, Xpeng (XPEV.US, 9868.HK) has the biggest upside on sales/earnings growth, while NIO(NIO.US) has the biggest uncertainty. </li>
</ul>


Auto supply chain issue, including chip shortage, might be worse in 2022E. Local brands might keep gaining market share due to their higher localisation rates
NEV models would continue gaining market shares as they are affected less by chip shortage and more cost friendly when global fuel cost surges
Among three listed EV players, Xpeng (XPEV.US, 9868.HK) has the biggest upside on sales/earnings growth, while NIO(NIO.US) has the biggest uncertainty. 


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)

China Auto: Another Weak Month

China's overall auto retail sales remained week in November due to limit car storage in dealers (less supply), less promotions and interruptions...

Victoria Li

Tesla Can Deal with Supply Chain Shortage, Unlike Most Chinese Peers

BYD is positioned well, too. The global automotive industry is facing a deepening supply chain crisis

EqualOcean

Tesla's Record Revenue in Q3 Reflective of China's Solid EV Foundation

Share prices for Tesla have soared to all-time highs after earnings and amidst reports of a 100,000-car deal with car rental company Hertz.

EqualOcean

Meituan Dianping & Nio Inc: The Definitive EM Underweights

Large benchmark weights have not been enough to lure active managers to invest in either Nio or Meituan in the numbers we would expect. They stand...

Steven Holden

China Auto Sector Outlook 2022E

Auto supply chain issue, including chip shortage, might be worse in 2022E. Local brands might keep gaining market share due to their higher...

Victoria Li

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