Car makers recorded generally stronger sales data for June, and it is expected that high-frequency data and market sentiment will bottom out in the second half of July, according to CMSI's research report.

The Chinese government normalized the regulation of “involution” of auto companies, while GEELY AUTO (00175.HK)  +0.020 (+0.110%)    Short selling $175.74M; Ratio 17.439%   's brand Galaxy, LEAPMOTOR (09863.HK)  -1.750 (-2.869%)    Short selling $2.37M; Ratio 1.331%   and XPENG-W (09868.HK)  -0.500 (-0.706%)    Short selling $118.62M; Ratio 12.848%   (XPEV.US)      are expected to be the relative beneficiaries. CMSI' top pick is GEELY AUTO on its higher growth rate and lower valuation, followed by LI AUTO-W (02015.HK)  +0.100 (+0.088%)    Short selling $74.03M; Ratio 11.954%   (LI.US)      and XPENG-W.

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From a market share and sales volume perspective, CMSI said that, strengthened involution regulation will have a negative impact on BYD COMPANY (01211.HK)  -0.900 (-0.729%)    Short selling $564.81M; Ratio 36.829%   (002594.SZ)  +0.670 (+0.207%)   's ability to boost its domestic market share in the short term, but the company will make up for it by accelerating its overseas expansion.

Other new forces favored include XIAOMI-W (01810.HK)  -0.350 (-0.607%)    Short selling $245.02M; Ratio 7.668%   's Xiaomi Auto and Huawei Aito, driven by the launch of Xiaomi YU7 and sales of M8/M7.

In terms of auto parts, the broker recommended FUYAO GLASS (03606.HK)  +0.050 (+0.087%)    Short selling $14.29M; Ratio 20.013%   and MINTH GROUP (00425.HK)  -0.100 (-0.396%)    Short selling $17.61M; Ratio 17.287%   , as the former has high industry barriers and strong pricing ability, while the latter entered the new humanoid robotic segment to promote valuation recovery.

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In terms of the smart driving supply chain, CMSI recommended HORIZONROBOT-W (09660.HK)  0.000 (0.000%)    Short selling $75.16M; Ratio 8.868%   and Hesai Group (HSAI.US)      , which are the leading domestic smart driving SoC chip provider and the world's leading and first profitable lidar company respectively.

In terms of robotics OEMs, CMSI recommended UBTECH ROBOTICS (09880.HK)  +0.200 (+0.247%)    Short selling $9.48M; Ratio 2.313%   , the leader in China's humanoid robot industry with the largest factory training in the world, and DOBOT (02432.HK)  +0.300 (+0.515%)    Short selling $9.47M; Ratio 8.179%   , the leader in China's collaborative robots, with the world's second-largest shipment volume and the first in China.

The table below shows ratings and target prices for Chinese automakers from CMSI:

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Stock| Rating| TP (HKD)
GEELY AUTO (00175.HK)  +0.020 (+0.110%)    Short selling $175.74M; Ratio 17.439%   |Buy| 27.5
BYD COMPANY (01211.HK)  -0.900 (-0.729%)    Short selling $564.81M; Ratio 36.829%   |Buy|170
XPENG-W (09868.HK)  -0.500 (-0.706%)    Short selling $118.62M; Ratio 12.848%   |Buy|115
ZHONGSHENG HLDG (00881.HK)  -0.320 (-2.671%)    Short selling $19.17M; Ratio 34.927%   |Buy|24
FUYAO GLASS (03606.HK)  +0.050 (+0.087%)    Short selling $14.29M; Ratio 20.013%   |Buy|73
LI AUTO-W (02015.HK)  +0.100 (+0.088%)    Short selling $74.03M; Ratio 11.954%   |Buy|138
GWMOTOR (02333.HK)  -0.200 (-1.515%)    Short selling $14.94M; Ratio 15.680%   |Buy|19
MINTH GROUP (00425.HK)  -0.100 (-0.396%)    Short selling $17.61M; Ratio 17.287%   |Buy|34
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