China Securities Co., Ltd.: Continuation of state subsidies in 2026, strengthening the technological attributes of the automotive industry.

China Securities Co., Ltd. released a research report stating that the current market has weak expectations for next year's stimulus policies and total production and sales of cars. The cyclical nature of the automobile industry has weakened, and it is believed that expectations may have bottomed out. The growth direction of technologies such as Siasun Robot&Automation and autonomous driving remains the core theme. Siasun Robot&Automation is currently in a stage of consolidation after expectations have been adjusted, and it is recommended to actively allocate resources to high-win rate and technology upgrade segments. Key points from China Securities Co., Ltd. are as follows: In the complete vehicle sector, the Central Economic Work Conference this week emphasized the importance of domestic demand, building a strong domestic market, optimizing the implementation of policies related to new industries, and extending national subsidies policies until 2026. Sales of top car companies have weakened recently, and the anticipated end-of-year surge in sales did not materialize. Subsidies for replacing old vehicles with new ones have been suspended in some regions, leading to low market sentiment. The company remains optimistic about the upscale of domestic passenger cars, the strong cycle for new cars, and leading new energy companies venturing overseas. In the Siasun Robot&Automation sector, it is currently recommended to take a bullish stance. Since the end of November, the sector has been in a rebound phase after bottoming out, driven by new developments such as small batch (hundreds of units) orders in the Tesla supply chain. Last week, U.S. policies supporting humanoid Siasun Robot&Automation also provided market support, and the application of new technologies such as GaN has attracted attention. The realization of new milestones will be crucial for the continuation of the market, including: the gradual launch of orders in December, the release of the Gen3 in Q1 2025, entering small batch production in Q2, and entering full-scale production in the second half of the year. The listing application of Yushu may also be a important catalyst. The industry is currently in a phase of consolidation after expectations have been adjusted, and it is advised to actively allocate resources to high-win rate and technology upgrade segments. In the commercial vehicle sector, sales of heavy trucks in November reached 113,000 units, a year-on-year increase of 65% and a month-on-month increase of 7%; sales of large and medium-sized buses reached 13,000 units, a year-on-year increase of 25% and a month-on-month increase of 12%, with exports reaching 4,000 units, a year-on-year increase of 26% and a month-on-month increase of 12%. High-quality undervalued assets currently have a strong performance in the market, and are expected to see stable growth next year as they venture overseas, especially in the growth of buses and motorcycles. The heavy truck engine industry chain benefits from increased demand, with leading companies such as Weichai having potential for revaluation. Recommended portfolio: Hengbo Holdings, Weichai Power, Yutong Bus Co., Ltd., Anhui Jianghuai Automobile Group Corp., Ltd., Zhejiang Sanhua Intelligent Controls, Wuxi Longsheng Technology.