China Specialist, Auto and Industrial Specialist

Victoria Li

Thematic (Sector/Industry)

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales increased by 4%, from 6.4% in April. Chip shortage issue might be bottoming.Except Xpeng, the deliver of the main EV brands decreased MoM, indicating EV segment sales might decreased slightly MoM due to seasonality. According to posts on social media (not official source), Tesla China's order in May was halved. However, its delivery in China is estimated to increase by 88% MoM. Negative impact from recent PR Crisis related to 'brake failure' or 'sudden acceleration' appears to have been quite limited.Xpeng (XPEV.US) and Geely (175.HK) remain our favourites among emerging EV brands and traditional OEMs  respectively.

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales increased by 4%, from 6.4% in April. Chip shortage issue might be bottoming.Except Xpeng, the deliver of the main EV brands decreased MoM, indicating EV segment sales might decreased slightly MoM due to seasonality. According to posts on social media (not official source), Tesla China's order in May was halved. However, its delivery in China is estimated to increase by 88% MoM. Negative impact from recent PR Crisis related to 'brake failure' or 'sudden acceleration' appears to have been quite limited.Xpeng (XPEV.US) and Geely (175.HK) remain our favourites among emerging EV brands and traditional OEMs  respectively.

China Auto: End Demand Keeps Getting Better; Chip Shortage Bottoms

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.

Equity Bottom-Up

In 5M, <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>  China received ~72K orders for MIC M3, plus 22K backlog orders exiting 2020.  GF3 made 103K M3 in 5M, among which 69K were delivered in China and 29K were exported.  The estimated order backlog exiting May was ~25K, slightly down from 26K backlog exiting April.  Excess production at the GF3 has been exported to markets around the world.  If TSLA China does not implement effective promotional programs and or policies to stimulate demand, we estimate that MIC 3 orders will stagnate around 9K per month, vs. monthly production of ~21K.  In other words, MIC 3 exports are likely to increase MoM due to the lower cost structure including BoM of MIC cars.

In 5M, Tesla Motors (TSLA US)  China received ~72K orders for MIC M3, plus 22K backlog orders exiting 2020.  GF3 made 103K M3 in 5M, among which 69K were delivered in China and 29K were exported.  The estimated order backlog exiting May was ~25K, slightly down from 26K backlog exiting April.  Excess production at the GF3 has been exported to markets around the world.  If TSLA China does not implement effective promotional programs and or policies to stimulate demand, we estimate that MIC 3 orders will stagnate around 9K per month, vs. monthly production of ~21K.  In other words, MIC 3 exports are likely to increase MoM due to the lower cost structure including BoM of MIC cars.

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China. Based on available data, we estimate sales growths of both auto sector shipment and end demand in April 2021(vs. April 2019) to accelerate. OEMs shipment accelerated as well, which might be a good sign that chips shortage started easing.According to individual EV makers' latest sales data, China's NEV sales might be flattish MoM. It continues outperforming the overall auto market. In April, Xpeng(XPEV.US) car sales increased slightly MoM, while NIO's (NIO.US) sales decreased slightly MoM due to chip shortage. Li Auto's (LI.US) April sales  grew 13% MoM.

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China. Based on available data, we estimate sales growths of both auto sector shipment and end demand in April 2021(vs. April 2019) to accelerate. OEMs shipment accelerated as well, which might be a good sign that chips shortage started easing.According to individual EV makers' latest sales data, China's NEV sales might be flattish MoM. It continues outperforming the overall auto market. In April, Xpeng(XPEV.US) car sales increased slightly MoM, while NIO's (NIO.US) sales decreased slightly MoM due to chip shortage. Li Auto's (LI.US) April sales  grew 13% MoM.

China Auto: Early Positive Signs of Chips Shortage Easing

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Meituan raised USD 10 billion yesterday via a combination of equity placement, convertible bond issue and share placement to its shareholder Tencent (700 HK) (Refer to our colleague <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" data-smartkarma-citation="accounts:4" rel="noopener">Sumeet Singh</a>'s note on placement<a href="https://www.smartkarma.com/insights/meituan-placement-might-not-do-a-tencent-but-low-end-looks-enticing" target="_blank" rel="noopener"> here</a>). The use of proceeds is for the technology innovation, including the research and development of autonomous delivery vehicles, drones delivery and other cutting-edge technology.
In this note, we look at Meituan's development with respect to the robotic technology to investors some flavor of what Meituan and its related party has done. We believe the robotic technology could become the company's potential long term re-rating catalyst.

Meituan raised USD 10 billion yesterday via a combination of equity placement, convertible bond issue and share placement to its shareholder Tencent (700 HK) (Refer to our colleague Sumeet Singh's note on placement here). The use of proceeds is for the technology innovation, including the research and development of autonomous delivery vehicles, drones delivery and other cutting-edge technology.
In this note, we look at Meituan's development with respect to the robotic technology to investors some flavor of what Meituan and its related party has done. We believe the robotic technology could become the company's potential long term re-rating catalyst. 

Meituan: Why Robotic Technology Is a Sensible Move

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<ul class="">
<li>Xiaomi plans to produce electric vehicle.</li>
<li>The court forces Douyu to compensate Huya for broadcaster poaching.</li>
<li>Tencent Music and Vipshop launch share repurchase programs.</li>
</ul>
Our coverage on Chinese equities:
E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).
Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).
Others: Xiaomi (1810 HK).


Xiaomi plans to produce electric vehicle.
The court forces Douyu to compensate Huya for broadcaster poaching.
Tencent Music and Vipshop launch share repurchase programs.

Our coverage on Chinese equities:
E-commerce: Alibaba (9988 HK, BABA US), Meituan (3690 HK), JD.com (9618 HK, JD US), JD Health (6618 HK), KE (BEKE US).
Online Entertainment: Tencent (700 HK), Kuaishou (1024 HK), NetEase (9999 HK, NTES US), Bilibili (BILI US), Tencent Music (TME).
Others: Xiaomi (1810 HK).

China Internet Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu

China

Li Auto Inc. manufactures automobiles. The Company designs, develops, and sells smart new energy electric sport utility vehicles. Li Auto conducts businesses in China.

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Li Auto (LI US)

China Auto: End Demand Keeps Getting Better; Chip Shortage Bottoms

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales...

Victoria Li

TSLA China Losing to Chinese NEV OEMs

TSLA will begin to experience excess production of the Y in the next couple of months, as the China order backlog wanes from 43KQ1 to 17K Q2. Y...

JL Warren Capital

China Auto: Early Positive Signs of Chips Shortage Easing

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China.

Victoria Li

Meituan: Why Robotic Technology Is a Sensible Move

In this note, we look at Meituan's development with respect to the robotic technology. We believe the robotic technology could become the company's...

Ke Yan, CFA, FRM

China Internet Weekly (Apr 5): Xiaomi Plans Electric Vehicle, Huya Gets Compensation from Douyu

Xiaomi plans to produce electric vehicle.The court forces Douyu to compensate Huya for broadcaster poaching.Tencent Music and Vipshop launches...

Ming Lu

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