China Merchants Securities: The latest car stock ratings and target prices (table), focusing on recommending BYD shares (01211), etc.

The Zhitong Finance App learned that China Merchants Securities released a research report saying that auto stocks have entered an adjustment period returning to fundamentals after surging before the National Day. They are optimistic that the strong product cycle will continue to next year's high-quality stocks, which will increase the probability of increasing performance, and that high certainty will switch the valuation base period to next year ahead of schedule. The bank generally raised its target price for auto stocks, focusing on Geely Auto (00175), BYD (01211), Fuyao Glass (03606), and Ideal Automobile-W (02015).

The bank said that according to data from the Passenger Federation, the mainland sold 2.5 million passenger cars in September, up 2.1% year on year and 16.1% from quarter to quarter. Peak season effects are beginning to show. In the first nine months of this year, the industry sold a total of 18.44 million vehicles, an increase of 3.4% over the previous year. In terms of new energy vehicles, stimulated by increased subsidy policies, 1.23 million vehicles were sold in September, up 48.1% year on year, up 17.2% from quarter to quarter, and the penetration rate reached 49.1%. The total number of wholesale units in the first nine months of this year was 7.9 million units, an increase of 33.7% over the same period last year.

According to data from the scrapping platform, as of October 4, 1.258,000 subsidy applications had been received, with new energy vehicles accounting for 62%. The recycling volume of end-of-life vehicles increased by 42.4% year-on-year in eight months of this year. After the subsidy amount was increased, the average amount of scrapping applications per day for monitoring increased dramatically from quarter to quarter. The bank believes that next year's policy space is still huge. According to the Automobile Dealers Association, the number of eligible old cars owned by the end of 2023 is about 14.55 million, which is close to half a year of national new car sales. It is expected that this year's policy will drive industrial sales of 2 million to 3 million vehicles, and there is still huge room for policy action to stimulate sales next year. Furthermore, the Ministry of Industry and Information Technology said it will continue to host special events for energy vehicles going to the countryside at the end of the year to simultaneously promote charging infrastructure to the countryside.

The following table shows China Merchants Securities's latest ratings and target prices for auto stocks: