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2026-10-23 13:15:53 CLSA issued a research report stating that China's auto sector had earlier been weighed down by uncertainties surrounding tariffs and export tax rebate policies, but the related headwinds have largely been reflected in share prices. Historical risk-reward analysis showed further upside potential at current levels. The broker estimated that lower export tax rebates would reduce exporters' earnings by mid- to high-single-digit percentages in 2027, but this could be fully offset by product mix improvements and ASP pass-throughs. In the short term, it expected most automakers' 3Q earnings to continue improving, with aggregate QoQ growth of about 60% among its coverage universe. Among them, LEAPMOTOR (09863.HK) and BYD COMPANY (01211.HK) were expected to benefit the most, with 3Q net profit forecast to rise 421% and 50% YoY respectively. The broker upgraded the sector rating from "Underweight" to "Neutral". It lowered TP on GEELY AUTO (00175.HK), BYD COMPANY (01211.HK), XPENG-W (09868.HK), LI AUTO-W (02015.HK) and NIO-SW (09866.HK), while raising TP on LEAPMOTOR (09863.HK), as detailed in the table below. The broker expected China's domestic passenger vehicle sales to fall 20.9% to 19 million units in 2026, reflecting weaker policy support and soft consumer demand. EV sales were forecast to reach 17.2 million units and further rise to 20.5 million units in 2027. New energy vehicle exports were projected at 5.3 million units and 7.2 million units in 2026 and 2027 respectively. Within the auto sector, the broker maintained GEELY AUTO (00175.HK), LEAPMOTOR (09863.HK) and BYD COMPANY (01211.HK) as its top picks. CLSA's latest ratings and TP table for Chinese auto stocks are as follows: Stock|Rating|TP(HKD)|Change(%) BYD COMPANY (01211.HK)|High Conviction Outperform|HKD120 -> HKD109|Down 9% GEELY AUTO (00175.HK)|High Conviction Outperform|HKD30 -> HKD22|Down 27% LEAPMOTOR (09863.HK)|Outperform|HKD60 -> HKD61|Up 2% LI AUTO-W (02015.HK)|Outperform|HKD68 -> HKD55|Down 19% NIO-SW (09866.HK)|Outperform|HKD55 -> HKD29|Down 47% XPENG-W (09868.HK)|Outperform|HKD80 -> HKD44|Down 45% (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. | |