On July 6th, in the afternoon, the auto sector of Hong Kong stocks fell. As of press time, shares of Dongfeng Group, () fell more than 5%, () fell more than 4%, Geely Automobile fell more than 3% and () fell more than 2%.
At the same time, the A-share auto sector is also falling, Hanma Technology has fallen, and Guangzhou Automobile Group, () and () have weakened.
Year-to-date, the share price of () has risen by over 388%, and the share price of Xiaokang has also risen by over 250%.
On January 12th this year, Zotye Motor announced the progress of public recruitment of investors, saying that two prospective investors had paid the corresponding confidentiality deposit and intention deposit, and started to carry out specific due diligence work after paying the deposit. Since then, Zotye Auto’s share price has been rising all the way.
However, up to now, two prospective investors have terminated their investment and one has suspended their investment. This also means that the pre-reorganization plan started by Zotye Automobile last year may fail.
It is worth mentioning that Zotye Motor has a huge loss. According to the data of Zotye Auto’s annual report, the company lost 10.801 billion yuan in 2020, and its net assets at the end of 2020 were-4.423 billion yuan. At the same time, the company’s main business vehicle business is in a state of suspension or semi-suspension.
Xiaokang Co., Ltd. is an entity manufacturing enterprise with engines and new energy vehicles as its core business and complete vehicles as its main business. Now it has formed a complete industrial chain integrating independent research and development, manufacturing, sales and service of complete vehicles, engines and auto parts. In addition, Xiaokang’s stock business also involves car rental and Internet consumer finance.
The previous rise seems to have exhausted the market enthusiasm. What will happen to the market structure of the automobile industry in the second half of the year? What should investors focus on?
It is worth noting that many brokers frequently mention two points in the strategy of automobile industry: intelligence and independent brands.
Northeast Securities: Automotive Intelligentization Welcomes Turning Point, Huawei Leads the Wave.
We believe that intelligent transformation is a clear trend in the automobile industry, and it has already reached an inflection point. Intelligent automobile is the main investment logic in the next few years. At present, both OEMs and Tier1 manufacturers are actively increasing the intelligent layout. We are most concerned about Huawei. Huawei entered the automotive field and positioned itself as a Tier1 manufacturer. We judge that Huawei will lead the wave of automobile intelligence. We believe that intelligent driving and intelligent cockpit are the core solutions of Huawei, and these two segments are also the core of the wave of automobile intelligence.
Investment advice:
Great Wall Motor
Among domestic vehicle manufacturers, Great Wall Motor has a prominent strategic layout in the field of intelligent driving, and cooperates with Qualcomm and Huawei. Great Wall Motor will be the first to launch a coffee intelligent driving system based on the SnapdragonRide platform in the high-end models launched in 2022. Great Wall Motor and Huawei also cooperate in the fields of intelligent networking and intelligent driving. Huawei will provide Great Wall Motor with a high computing power intelligent driving computing platform based on MDC, and cooperate with Great Wall Motor to complete various evaluations and tests of the sensing components required for intelligent driving.
Changan automobile
() Join hands with Huawei and () to cooperate in the field of automotive intelligence. Changan Automobile has a strong ability to build cars, and it also has the accumulation of intelligent driving schemes. Combined with Huawei’s technical modules, it is expected to launch excellent intelligent cars.
Baolong technology
ADAS is still a good landing point for intelligent driving, and we continue to firmly recommend it (). Baolong Technology’s ADAS business made great efforts, and in 2021, it became the leading commercial vehicle ADAS in China, and subsequent passenger cars continued to follow up. At the same time, the company’s multi-category sensor business has developed rapidly and has broad application space in the field of autonomous driving.
Fuyao glass
Under the wave of intelligence, the permeability of skylight glass and HUD glass has increased, and the automotive glass business has ushered in a new space. As a new kind of automobile glass, skylight glass is widely used in electric vehicles. In recent years, HUD glass has gradually sunk from high-end cars to low-end models, accelerating market penetration and leading the trend of automobile intelligence. As a leader in the automotive glass industry, the company is expected to take the lead in benefiting from the growth space.
China Merchants Securities: "Intelligent Control, Electric Future" Accelerate Development
Automobile industry: the chip problem is expected to be solved in the third quarter, and the economy will pick up in the fourth quarter.
Passenger cars: It increased by 38.1% year-on-year from January to May, and it is estimated that the industry will be 7.5% in 2021.
New energy vehicles: From January to May, it increased by 2.5 times year-on-year, the C-end increased by 263%, and the supply of high-quality products increased. In May, the monthly penetration rate of new energy passenger cars was 11.5%, and the curtain of marketization opened, which will usher in a decade of high growth.
Commercial vehicles: It is estimated that the sales volume of heavy trucks will be under pressure with the strict implementation of the national six emission standards in the second half of 2021, and the national six emission upgrade will activate the 100 billion post-processing market.
"Intelligent control, electric future", the industry is advancing at full speed.
1. The whole vehicle: electrified and intelligent. The launch of new models in the electric vehicle industry will be accelerated, and the C-end consumption will rise and enter an accelerated penetration period. It is estimated that the industry sales will reach 2.2 million units in 2021, and electrification will change the cost structure of the industry for a long time; The accelerated investment in the direction of intelligence will change the industry ecology and change the business model. New elements will drive hardware intelligence and software-defined cars.
2. Parts and components: high-end, modular and international. High-end products enhance the value of products, modularity and then enhance the supporting value. The large domestic market and low cost determine the inevitable trend of the internationalization of parts and components.
Investment strategy: pay equal attention to structure and trend, and comprehensively lay out the automobile industry.
From top to bottom, we are optimistic about the systematic opportunities in the automobile industry. In terms of structural performance, new energy, parts and intelligence are the sub-sectors with high prosperity in 2021.
Passenger car: Great Wall Motor and Geely Automobile with strong product cycle are recommended; Guangzhou Automobile Group and () whose current valuation is still at a relatively low level in history are recommended.
Parts and components: Grasp "high-end, modular and international", and recommend (), (), (), (), () and so on.
Intelligence: Intelligent driving is the general trend, and many links have investment value. We recommend (), () and (), and pay attention to Shunyu Optics (electronic group coverage), () (electronic group coverage), () (electronic group coverage), () (electronic group coverage) and () (computer group coverage). The new forces represented by Tesla are growing fast and making high profits, and the relevant targets of the industrial chain are recommended.
New energy vehicles: electrification ushered in a blowout of good products and the rise of market-oriented C-end consumption, recommended BYD, paid attention to the formation of Huawei’s automobile industry ecology, and paid attention to Changan Automobile, () and Xiaokang shares; Short-term policies for fuel cells are frequent, focusing on Yihuatong, () and ().
China galaxy: Electric power has arrived, and intelligent driving is escorting.
After the epidemic, the demand picked up, and the long-term space was huge. Due to the epidemic and extreme weather, the global supply of automobile chips was in short supply, and the terminal production was reduced, which made the industry enter a tight balance state where demand exceeded supply. It is expected that the supply pressure of 21Q3 chip will be gradually eliminated.
We estimate that the sales volume of passenger cars in 2021 is expected to reach 21.7 million, Yoy+7.7%;
There is still room for doubling the total automobile sales for a long time. At present, the average number of cars per thousand people in China is less than 200. In the long run, there is still much room in absolute terms. Referring to the development history of the United States, Japan and South Korea, we predict that by 2030, the domestic car ownership is expected to be close to 400 vehicles per thousand people, and the CAGR is expected to reach 8% in 9 years;
It is estimated that 2.5 million new energy passenger cars will be sold in 21 years. The electrification penetration rate will exceed 10% from January to April in 21 years, and the year-on-year growth rate will exceed expectations. The annual sales volume is expected to increase by nearly 100% year-on-year. The products of traditional car companies have been accelerated, and the technology giants have successively entered the market. The trend of electrification is a foregone conclusion.
Intelligent components accelerate the penetration of new forces to build cars. At present, intelligent driving and cockpit equipment are stronger than traditional OEMs. We judge that traditional OEMs will accelerate the transformation to comprehensive intelligence, and the market for automatic driving and intelligent cockpit components will be the main increase in the future;
A new generation of hardware paves the way for intelligent driving. Driving assistance and intelligent cockpit have given birth to the application of a new generation of electronic and electrical architecture, which has stronger computing power. The increase in the types and quantity of bicycle driving assistance sensors is a general trend, and the difference in bicycle value between high/low-level driving assistance systems is about 10 times. Independent component suppliers have the advantage of being a latecomer and are expected to emerge suddenly.
Investment suggestion: For the whole vehicle, we suggest paying attention to Changan Automobile with strong cycle products, Great Wall Motor, the leader in segmentation, and SAIC Motor, whose relative valuation is at a low level. The parts industry suggests paying attention to 1) intelligent targets: (), (); 2) Internationalized and high-end modular leaders: Huayu Automobile and Chineydy; 3) Increase in bicycle value: (), Fuyao Glass;
Shanxi Securities: With the rise of independent brands, the new energy vehicle market has broad prospects.
Industry Review & Prediction: In the first half of 2021, the overall automobile consumption remained stable, the overall profitability of enterprises was restored, and the cumulative sales volume and cumulative retail sales of automobile products increased at a high speed year-on-year. In the short term, due to the chip supply problem and the sharp rise in raw material prices, the automobile industry is still facing downward pressure on performance, but the economy continues to recover steadily, the production and operation of enterprises continue to expand steadily, and the industry still has room for growth. The overall trend of the industry in the second half of 2021 remains unchanged.
1) The overall positive trend of passenger cars in the second half of the year remains unchanged, and self-owned brand passenger cars and electric vehicles are expected to maintain rapid growth. 2) The overall demand for buses is declining. With the gradual advancement of new energy technologies and the gradual growth of the RV market, the new energy and emerging markets of road buses are expected to provide an increase for the bus market. 3) Heavy trucks are expected to continue to operate at a high level throughout the year. However, due to the emission regulations, the demand for heavy trucks is mainly released in the first half of the year, and the sales volume may narrow to some extent in the second half of the year.
The share of SUV continues to increase, and the self-owned brand passenger cars are gradually laid out in a high-end way. Since the beginning of 2021, the cumulative production and sales of passenger cars have continued to grow at a high speed year-on-year, but the growth rate has narrowed. In terms of vehicle types, SUV is the model that contributes to the main increment of passenger car sales, and its year-on-year performance is better than other models as a whole, and its sales share has been continuously improved since 2010. In terms of car system, the cumulative sales growth rate of self-owned brand passenger cars is ahead of the industry, and the trend of high-end is obvious. Self-owned brand vehicle manufacturers with high-quality brands and active layout of high-quality tracks are expected to continue to seize market share by relying on their own high-quality models. In addition, luxury cars are still outstanding, with diversified products, obvious characteristics of consumption upgrading in the automobile market, and the threshold for overlapping car purchases has dropped, and luxury cars are expected to maintain their leading position. On the whole, we are optimistic about the market segments of self-owned brand passenger cars under the trend of luxury cars and high-end, as well as the structural opportunities of cars, SUVs and other market segments. It is suggested to pay attention to vehicle manufacturers with high-quality brands, novel designs and perfect vehicle matrix, and actively lay out the fields of automobile intelligence and electrification.
The penetration rate of new energy vehicles has gradually increased, focusing on core components and battery industry chain. From January to May in 2021, the production and sales of new energy vehicles reached 967,000 and 950,000 respectively, up 2.2 times year-on-year, and the penetration rate of new energy vehicles was 9.4%, which became the core driving force to support the demand and performance growth of passenger car and parts enterprises. In the long run, the policies of "peak carbon dioxide emissions", "carbon neutrality" and "fuel vehicle license restriction" make it clear that new energy vehicles will gradually replace fuel vehicles in the future, and the intelligent networking, automatic driving and quick response of products will inject more advantages into new energy vehicles. In the past, battery life and safety problems have been improved with the improvement of battery and fast charging technology. At present, the cost performance of domestic new energy vehicles is gradually equal to that of fuel vehicles, and the market prospect is broader. It is expected that battery core components with high barriers, such as high nickel anode, cathode and membrane faucet, will gain rapid development opportunities by virtue of scale effect and local advantages.
Investment suggestion: the consumption structure of passenger car market is continuously optimized, independent brands are gradually rising, luxury cars continue to lead the market, the penetration rate of new energy vehicles is steadily increasing, and there are many structural investment opportunities to maintain the industry’s "optimistic" rating. Industry stock selection suggestions focus on two main lines: first, the vehicle leader with high-quality brand and high-quality track layout; The second is to focus on new energy vehicles and automobile intelligence, focusing on core components and battery industry chain. Suggested attention: Guangzhou Automobile Group, Great Wall Motor, BYD, (), (), ().
Guosen Securities (Hong Kong) Financial Holdings: Embracing the Advantages of Independent Brands.
The market share of independent brands continues to rise.
According to the data of China Automobile Association, in the first five months of 2021, the market share of self-owned brand passenger cars recorded 41.6%, up 3.2 percentage points from 2020. If we look at the monthly data, the market share of independent brands fell to a multi-year low of 33.5% in June 2020, and then it continued to rise significantly, and the trend of continuous decline in share in recent years was obviously reversed.
By analyzing the sales data of specific vehicle manufacturers, we can see that the share of independent brands continues to rise, which is not driven by the high sales of a few car companies, but that most car companies have achieved good performance beyond the industry. For example, the sales growth rate of Great Wall Motor, Changan Automobile, Chery Automobile, BYD and other car companies in the first five months of 2021 far exceeded the industry average.
The overall competitiveness of mainstream independent brands has improved significantly.
The share of self-owned brand car companies continues to increase. We think one of the main reasons is that the overall competitiveness of mainstream self-owned brands has improved significantly, and this improvement has certain universality. The obvious improvement of competitiveness is first reflected in product competitiveness. In the past, self-owned brand models often attracted consumers through rich configurations and relatively low prices. In recent years, with the overall progress of self-owned brand car companies in vehicle interior and exterior design, dynamic performance, driving quality and other aspects, product competitiveness has been significantly improved. Especially since the second half of last year, Geely, Great Wall and other self-owned brand head car companies have successively launched models whose performance and quality have not lost or even surpassed those of joint venture brands, driving the competitiveness of self-owned brand models to a new level.
The promotion of product competitiveness is driven by the continuous improvement of research and development and technical strength. In addition, in the past two years, independent brands have made considerable progress in vehicle planning and design, market positioning, market promotion and other soft power. Some car companies have achieved quite good results in the youth and trend strategy of vehicle design and promotion.
Generally speaking, the overall competitiveness of independent brands has improved significantly, which is the result of years of accumulation by car companies. At present, the gap between the product strength of self-owned brand models and joint venture brands is shrinking, and even some models have surpassed it. Moreover, from the aspects of new product launch frequency, iterative speed of vehicle renewal, intelligence, vehicle design route, marketing promotion strategy, etc., some head independent brands have begun to surpass the traditional joint venture brands. We believe that the overall competitiveness of independent brands is expected to continue to improve in the future, thus further promoting the continuous expansion of market share.
We believe that in terms of short-term and medium-term sales growth in the industry, the growth rate of passenger car sales in the third quarter may be lower, and it may pick up in the fourth quarter. In the medium and long term, the market share of independent brands will continue to expand or will become a general trend, while the share of mid-end joint venture car companies may be squeezed. In the future, we think it will focus on two aspects: 1. Independent brand advantage car companies; 2. Subdivision of new energy vehicles. Maintain the industry rating of outperforming the market. In terms of specific targets, we suggest focusing on Great Wall Motor, BYD, Geely Automobile and Guangzhou Automobile Group.