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2026-10-27 12:38:10 JPMorgan published a research report stating that the worst-case scenario for China's auto industry in 2027 may become the base-case scenario. The broker expects the upcoming 3Q26 results announcements to trigger earnings downgrades for 4Q26 and 2027, not only because most third-quarter results may miss expectations, but also because the market has begun incorporating several major headwinds into earnings assumptions, including stagnant domestic demand, cost inflation in memory chips and other components, a reduction in export VAT rebates from 13% to 9%, and a possible export volume gap of around 200,000 to 250,000 vehicles after the European Union imposed import quotas on plug-in hybrid vehicles. JPMorgan noted that the six major variables affecting 2027 earnings include lower export tax rebates (estimated to affect next year's automaker earnings by around 5% to 10%), EU import quotas on plug-in hybrids (with an estimated 6% to 8% earnings impact on BYD COMPANY (01211.HK) and CHERY AUTO (09973.HK)), further increases in memory chip prices, declines in lithium or battery prices that may be offset by price wars, flat to 5% lower domestic passenger vehicle demand, and export growth of around 20%. Reflecting a more cautious stance on the industry, the broker lowered forecasts for major automakers, broadly cut target prices, and downgraded the A-share rating on BYD Company (002594.SZ) from Neutral to Underweight. JPMorgan's latest ratings and target prices for Chinese auto stocks are listed below: Stock|Rating|TP (HKD) BYD Company (002594.SZ)|Neutral-癒rUnderweight|RMB88-癒rRMB65 BYD COMPANY (01211.HK)|Neutral|HKD88-癒rHKD60 CHERY AUTO (09973.HK)|Overweight|HKD35-癒rHKD30 GEELY AUTO (00175.HK)|Neutral|HKD16-癒rHKD14 GWMOTOR (02333.HK)|Underweight|HKD7-癒rHKD5.5 LI AUTO-W (02015.HK)|Underweight|HKD35 XPENG-W (09868.HK)|Neutral|HKD45-癒rHKD40 NIO Inc. (NIO.US)|Neutral|USD4.5-癒rUSD3.7 LEAPMOTOR (09863.HK)|Neutral|HKD36-癒rHKD30 (da/ad)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |