Jinwu Financial News | Guoyuan International has released the investment strategy for the Auto Industry in 2025. In terms of complete vehicles, it is expected that domestic auto demand will remain stable overall next year, with the market share of independent brands continuing to increase. However, the intensity of market competition is unlikely to significantly alleviate, and price pressure will continue to impact the entire supply chain. The competitive advantage of China's auto industry is generally strengthening, and if there are no significant changes in the international trade environment, the trend of export growth is expected to continue.
The bank recommends industry leader BYD Company (01211) (covered): the company has a vertical integration advantage in automotive electrification, is strongly developing Smart Phone technologies, and is continuously increasing its market share, with the current stock price corresponding to about 20 times PE for 2024; XIAOMI-W (01810) (covered): relying on supply chain synergies with Smart Phone products and others, it is building a 'human-car-home' ecosystem platform. The Xiaomi SU7 has exceeded 20,000 monthly deliveries within less than half a year of its launch, and next year’s new SUV is expected to sustain rapid sales growth, which will help the auto business quickly achieve break-even and contribute positively to net income, with the current stock price corresponding to about 40 times PE for 2024. Simultaneously, attention is also being paid to Geely Automobile (00175) (not covered), XPeng Motors (09868) (not covered), and Tesla (TSLA.O) (not covered).
In terms of auto parts, the performance of high-end intelligent driving and robot-related symbols is expected to have considerable elasticity and may enjoy a certain valuation premium. Domestic complete vehicle manufacturers are expected to enhance product competitiveness by extending high-end intelligent driving features to mid- to low-end models, which will benefit related solution suppliers, with a focus on Lidar supplier SUTENG JUC (02498) (not covered) and Hesai Technology (HSAI.O) (not covered), as well as intelligent driving solution supplier Horizon Robotics-W (09660) (not covered) and robot concept stock UBTECH (09880) (not covered). It is recommended to consider BYD Electronics (00285) (covered): the company is a core auto parts supplier for BYD Company and also a key parts supplier for leading global mobile phone manufacturers, and is collaborating with NVIDIA to expand its server business. The company's revenue and profits are expected to maintain growth in the medium to long term, with the current stock price corresponding to about 20 times PE for 2024.
