Xiaomo: Stay cautious and prefer BYD shares (01211) and Geely (00175) for the Chinese automobile industry

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that the second-quarter results of BYD (01211) were better than expected, focusing on its long-term strategic development. The bank remains cautious about the Chinese automobile industry as a whole. It is optimistic about car companies with scale advantages, diverse products and global layout, preferring BYD and Geely (00175). From a strategic point of view, the bank favors heavy trucks, such as Sinotruk (03808), rather than passenger cars.

J.P. Morgan predicts that BYD's average profit performance per vehicle will remain steady in the second half of this year, and the profit per vehicle is expected to remain around 10,000 yuan in the fourth quarter. With the gradual increase in production capacity in places such as Hungary, Indonesia, and Brazil, the profit per vehicle in overseas regions is expected to be even higher than the current level of about 20,000 yuan. The bank maintained BYD's H share “plus” rating and target price of HK$124, and continued to give BYD (002594.SZ) A “plus” rating and target price of RMB 124.