<News Alert> China Auto Sector – Chinese EV makers reported strong Oct sales growth
- Among the pure EV makers, Li Auto delivered slightly over 40k units last month (+302% yoy). Aito M7 did not pull business away from the company. Expect Li Auto to sell more than 300k vehicles for 2023 after achieving about 285k units for 10M23
- BYD also reported a 39% increase in volume shipment; bringing 10M23 total sales to about 2.4m units, growth of c.70%, on track to meeting its full year sales target
- Based on the auto companies’ latest monthly vehicle shipments, it implies the overall NEV market remains healthy
- Our preferred picks are BYD (1211 HK) and Li Auto (2015)
What’s new
Several Chinese automakers have released their October vehicle shipment numbers, largely encouraging in our opinion. Among the pure EV makers, Li Auto stands out as the company has surpassed the 40k mark slightly ahead of schedule. For 10M23, the company total volume shipment hit over 280k units, yoy expansion of about 194%, which in our opinion, is strong. Besides, it seems Huawei’s Aito M7 impact did not affect Li Auto sales and the company is expected to sell some 370k vehicles for 2023, yoy growth of about 180%. As the plug-in vehicle market remains robust, it should bode well on Li Auto vehicle sales, despite rising market competition. BYD also reported a 39% increase in volume sales, lifted by about 60%/19% increase in BEV/PHEV sales. For 10M23, the company has shipped c.2.4m units to its customers. Xpeng also recorded strong sales of 20k units in Oct, growth of 292%. However, the company only achieved about half of its full-year target, hence we expect there will be challenges in meeting the target. While NIO managed to report c.60% sales expansion, we find the sequential trend is not strong.
On the other hand, Zeekr sales growth was at 29% and achieving total sales of about 85.7k units for 10M23, translating to sales rate of about 66%. We anticipate the company to face challenges in meeting its sales target of 140k units for 2023, hence more sales promotion might be required to boost volume shipment. But for the Geely group, total vehicle sales rose 19% yoy last month, bringing total vehicle shipment to about 1.33m units, growth of 17%, reasonable in our opinion.
The overall sector performance has been impacted by the volatility of the stock market. Our preferred picks are BYD and Li Auto. We believe BYD has strong fundamentals to weather the growing competition in 4Q23, given its vertical integration and broad product offerings. Li Auto latest vehicle shipment number implies underlying sales are still well supported despite peers are rolling out EREV models to secure market shares. We have TPs of HK$410 on BYD and HK$224 for Li Auto.
