20231206-招银国际-China_Auto_Sector__Nov_leading_indicators__slower_MoM_growth_partially_reflected_in_mild_Nov_NEV_sales_4页_602kb

Summary of CMB Report: China Auto Sector - November 2023

Key Stock Ratings

• Li Auto (LI US): BUY target price $50
• NIO (NIO US): HOLD target price $8.5
• Xpeng (XPEV US): HOLD target price $16
• BYD (BYD HK): BUY target price $290
• Other stocks include BUY/HOLD ratings for firms like Geely, GWM, and GAC, with BUY ratings expected for potential returns over 15%.

Leading Indicators Analysis

• Indicators slowed in November, reflecting reduced leads (narrowed MoM growth for five brands), customer flow (NIO fell most), and new orders (average decline of 2% per store).
• BYD's price war triggered a sales slowdown, particularly affecting newer brands like NIO which fell 6% MoM in leads.
• Tesla maintained highest conversion ratios from leads to store visits; BYD had highest order-to-generation conversion.
• Projections: Strong December sales anticipated due to wider discounts, pre-buying ahead of subsidy expirations, and seasonal factors.

Key Observations

• Leading indicators based on sample stores in 15 Chinese cities suggest partial reflection of end-November data in sales figures.
• Analyst confidence in NEV sector driven by competitive market dynamics and potential for growth, despite temporary deceleration.

Cautions

• NIO and other brands face challenges with declining conversion metrics; BYD's actions may accelerate price competition.
• Overall positive outlook for strong Q4 performance.