Equity Research in HK and Mainland China

Li Tang

Cross Asset Strategy

<p>It’s been an excellent year for investors in the China electric vehicle stock, but some investors believe the speculation rather than underlying fundamentals, is sending China NEV(New Energy Vehicle) stock higher. We remain confident in the China-based electric vehicle (EV) maker’s prospects due to strong government policy and continued growing market.</p>
<p>We are positive on NEV makers (<a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" rel="noopener">Li Auto Inc. (LI US)</a> , <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> and <a href="https://www.smartkarma.com/entities/xpeng-motors" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng Motors (XPEV US)</a>) and NEV charging infrastructure ( <a href="https://www.smartkarma.com/entities/china-titans-energy-technology-group-co" target="_blank" data-smartkarma-citation="entities:3953:1" rel="noopener">China Titans Energy Technology Group Co (2188 HK)</a> ,  <a href="https://www.smartkarma.com/entities/ten-pao-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27241:1" rel="noopener">Ten Pao Group Holdings Ltd (1979 HK)</a>  )as both segments stand to gain from an improvement in NEV sales after NEV sales lagged the recovery in traditional auto sales, and with local governments providing various support measures.</p>
<p>China has bet big on NEVs as a strategically important industry, the government has five essential policy support tools for NEVs include reduced taxes, direct subsidies to manufacturers, consumer subsidies, mandated government procurements, and the industrial policy Made in China 2025 (Even China keep this plan at low profile due to trade war with the U.S).In this insight, we have highlighted the China recent NEVs support policy to evaluate China NEV industry.</p>

It’s been an excellent year for investors in the China electric vehicle stock, but some investors believe the speculation rather than underlying fundamentals, is sending China NEV(New Energy Vehicle) stock higher. We remain confident in the China-based electric vehicle (EV) maker’s prospects due to strong government policy and continued growing market.
We are positive on NEV makers (Li Auto Inc. (LI US) , NIO Inc (NIO US) and Xpeng Motors (XPEV US)) and NEV charging infrastructure ( China Titans Energy Technology Group Co (2188 HK) ,  Ten Pao Group Holdings Ltd (1979 HK)  )as both segments stand to gain from an improvement in NEV sales after NEV sales lagged the recovery in traditional auto sales, and with local governments providing various support measures.
China has bet big on NEVs as a strategically important industry, the government has five essential policy support tools for NEVs include reduced taxes, direct subsidies to manufacturers, consumer subsidies, mandated government procurements, and the industrial policy Made in China 2025 (Even China keep this plan at low profile due to trade war with the U.S).In this insight, we have highlighted the China recent NEVs support policy to evaluate China NEV industry.

China Aims To Build Strong Domestic NEV Brands that Can Compete in Global Markets

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Alibaba Group Holding  / Equity Capital Markets

<p>Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. </p><p>This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below. </p>

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese companies from listing or raising funds in the US. This bill has already passed by the Senate and will go to President Trump for the bill to be signed. We believe this is likely and while this bill impacts all foreign companies listed in the US, this could lead to the delisting of numerous Chinese companies listed in the US over the next three years. More details below. 

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

China Specialist, Auto and Industrial Specialist

Victoria Li

Equity Bottom-Up

<p><strong>We believe NIO's share performance would be under pressure in the near term. </strong></p><p><strong> 1) Locally produced Tesla Model Y (which would be NIO's first direct competitor model) might be launched in Jan 2021, which is competitive sales price and attractive performance.</strong></p><p><strong>2）NIO's battery swap business model is under challenge due to limited service capacity. Customers complaints are increasing, which might hurt NIO's sales performance soon. Previously, the key sales driver of NIO is customers satisfaction.</strong></p>

We believe NIO's share performance would be under pressure in the near term.  1) Locally produced Tesla Model Y (which would be NIO's first direct competitor model) might be launched in Jan 2021, which is competitive sales price and attractive performance.2）NIO's battery swap business model is under challenge due to limited service capacity. Customers complaints are increasing, which might hurt NIO's sales performance soon. Previously, the key sales driver of NIO is customers satisfaction.

APAC IPOs & Placements

Zhen Zhou, Toh

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.

<p><a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" data-smartkarma-citation="entities:28812:1" rel="noopener">Li Auto Inc. (LI US)</a> is looking to raise about US$1.5bn in its primary follow-on offering. Proceeds raised will be used for R&amp;D purposes and capex.</p><p>We have earlier covered the IPO extensively in July:</p><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/li-auto-pre-ipo-taking-the-long-way-around" target="_blank" data-smartkarma-citation="insights:41253" rel="noopener">Li Auto (理想汽车) Pre-IPO - Taking the Long Way Around</a> </li>
<li><a href="https://www.smartkarma.com/insights/li-auto-visit-li-auto-store-and-find-out-license-game" target="_blank" data-smartkarma-citation="insights:41299" rel="noopener">Li Auto (理想汽车): A to Visit Li Auto's Store and Find Out about the License Game</a></li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-pre-ipo-peer-comparison-margins-may-look-like-byd-but-sells-like-nio" target="_blank" data-smartkarma-citation="insights:41515" rel="noopener">Li Auto (理想汽车) Pre-IPO - Peer Comparison - Margins May Look like BYD, but Sells like NIO</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-ipo-worth-a-ride-at-the-low-end" target="_blank" data-smartkarma-citation="insights:41596" rel="noopener">Li Auto (理想汽车) IPO - Worth a Ride, at the Low -End</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/li-auto-trading-update-no-mention-of-hillhouse-s-investment" target="_blank" data-smartkarma-citation="insights:41746" rel="noopener">Li Auto (理想汽车) Trading Update - No Mention of Hillhouse's Investment</a> </li>
</ul>

Li Auto Inc. (LI US) is looking to raise about US$1.5bn in its primary follow-on offering. Proceeds raised will be used for R&amp;D purposes and capex.We have earlier covered the IPO extensively in July:

Li Auto (理想汽车) Pre-IPO - Taking the Long Way Around 
Li Auto (理想汽车): A to Visit Li Auto's Store and Find Out about the License Game

Li Auto (理想汽车) Pre-IPO - Peer Comparison - Margins May Look like BYD, but Sells like NIO 

Li Auto (理想汽车) IPO - Worth a Ride, at the Low -End 

Li Auto (理想汽车) Trading Update - No Mention of Hillhouse's Investment 


Li Auto (理想汽车) Placement - Opportunistic but Still a Worth a Bet Among EV Peers

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

<div><p><a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" data-smartkarma-citation="entities:28812:1" rel="noopener">Li Auto Inc. (LI US)</a> is seeking to raise as much as $1.6 billion (at the last close price) through an issue of 47 million ADSs. The funds will be used for R&amp;D of next-generation electric vehicle technologies (such as high-voltage platform, high C-rate battery, and ultra-fast charging), the next BEV platform and future car models, and autonomous driving technologies and solutions.</p></div><div><p>The follow-on offering comes just four months from the July IPO, where Li Auto raised net proceeds of $1 billion at $11.50 per ADS. The shares have been of a tear and have risen 3x since the IPO. The net cash including lease liabilities stood at $2.5 billion at the end of 9M20, which points to an opportunistic raise to build a war chest.  </p></div><div><div><div class="content-highlight"><p>We remain bullish on Li Auto’ prospects and believe that the company remains well-placed to deliver profitability in 2022. Notwithstanding, the strong share price run, the shares continue to look attractive relative to EV peers. Overall, we would participate in the placement.</p></div></div></div>

Li Auto Inc. (LI US) is seeking to raise as much as $1.6 billion (at the last close price) through an issue of 47 million ADSs. The funds will be used for R&amp;D of next-generation electric vehicle technologies (such as high-voltage platform, high C-rate battery, and ultra-fast charging), the next BEV platform and future car models, and autonomous driving technologies and solutions.The follow-on offering comes just four months from the July IPO, where Li Auto raised net proceeds of $1 billion at $11.50 per ADS. The shares have been of a tear and have risen 3x since the IPO. The net cash including lease liabilities stood at $2.5 billion at the end of 9M20, which points to an opportunistic raise to build a war chest.  We remain bullish on Li Auto’ prospects and believe that the company remains well-placed to deliver profitability in 2022. Notwithstanding, the strong share price run, the shares continue to look attractive relative to EV peers. Overall, we would participate in the placement.

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 Aims To Build Strong Domestic NEV Brands that Can Compete in Global Markets

We remain confident in the China-based electric vehicle (EV) maker’s prospects due to government strong policy support and continue growing market.

Li Tang

US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges

Late Wednesday evening, the US Congress unanimously passed the 'Holding Foreign Companies Accountable Act' which is a bill that could block Chinese...

Rickin Thakrar

NIO: Biggest Challenge Is Coming

We believe NIO's share performance would be under pressure in the near term. 1) Locally produced Tesla Model Y (which would be NIO's first direct...

Victoria Li

Li Auto (理想汽车) Placement - Opportunistic but Still a Worth a Bet Among EV Peers

Li Auto Inc. (LI US) is looking to raise about US$1.5bn in its primary follow-on offering. Proceeds raised will be used for R&D purposes and capex.

Zhen Zhou, Toh

Li Auto Placement: Revving Up

Li Auto Inc. (LI US) is seeking to raise as much as $1.6 billion (at the last close price) through an issue of 47 million ADSs. Overall, we would...

Arun George

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