CMSC International: Raising target price for XPENG-W (09868) to 50 Hong Kong dollars, optimistic on BYD Company (01211) and GEELY AUTO (00175).

CMSC International released a research report stating that the policy upgrades and peak season effects have improved the economic situation in the fourth quarter, and they are optimistic about companies resonating with policy dividends and the new car cycle, such as BYD COMPANY (01211) and GEELY AUTO (00175). In addition, XPENG-W (09868)'s new car Mona has boosted product cycle certainty, leading to an earlier estimation base period and an increase in the group's target price from 36 Hong Kong dollars to 50 Hong Kong dollars. According to data from the China Association of Automobile Manufacturers, the wholesale of passenger vehicles in China in August was 2.15 million, a year-on-year decrease of 3.9% but an increase of 9.6% quarter-on-quarter. Independent brands continued to show strength, with a 12% year-on-year increase, while mainstream joint venture car companies continued to decline by 30% year-on-year. From January to August of this year, a total of 15.94 million vehicles were wholesaled in the industry, a year-on-year increase of 3.7%. Looking ahead to September entering the peak season for the industry, supply and demand are expected to continue to strengthen. The bank stated that subsidy upgrades are helping to drive the peak season effect, with economic new energy vehicles having high elasticity, making BYD COMPANY and GEELY AUTO the most benefited. In addition, the capacity of the A-class car market is close to 8 million vehicles, with a low penetration rate of new energy vehicles. Following BYD's Yuan Plus, the sales of Geely's Galaxy E5 and XPENG's Mona 03 have surged, and A-class pure electric vehicles now have the advantages of high cost-effectiveness and intelligence, starting to grab a large share of the market from fuel cars.