China Securities Co., Ltd.: Anti internal incision and expected improvement in going global, autonomous driving and Siasun Robot & Automation catalyze one another.

China Securities Co., Ltd. released a research report stating that the current automotive sector is experiencing weak performance in the off-season. However, structural improvements are expected in terms of reversing the trend of overwork and expanding overseas markets. The implementation of automatic driving policies is catalyzing, and the display of the Tesla V3 prototype by Siasun Robot & Automation was impressive. The company maintains its previous views, expecting the 26-year-old car replacement policy to support domestic demand, with commercial vehicles potentially benefiting more. Structurally, they are optimistic about the commercialization of AI on both ends (autonomous driving and Siasun Robot & Automation), with the breakthrough from 0 to 1 bringing valuation flexibility. They are also monitoring the reversal of the bottom-bound cycle of dealerships under the trend of reversing the trend of overwork. Main points of China Securities Co., Ltd. are as follows: Automobile sector: The prosperity continues with "weak expectations, weak reality," and the trend of reversing overwork continues to advance, with export expectations improving. This week, the China Passenger Car Association disclosed that in the first 11 days of January 2026, domestic passenger car wholesales and retail sales were down by 40% and 32% year-on-year, respectively, with new energy vehicles down by 30% and 38% respectively. The off-season market is under pressure, but market expectations may have already dulled. On January 14, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Market Supervision Bureau held a symposium with industry players in the new energy vehicle sector, aiming to regulate the competition order in the industry and resist disorderly "price wars." Dealers' new car sales are expected to improve profitability. Additionally, on January 12, the Ministry of Commerce briefed on the progress of negotiations on the China-EU electric vehicle case, proposing to provide general guidance on price commitments to Chinese exporters of pure electric vehicles to the EU. On January 16, Canadian Prime Minister Justin Trudeau, who was visiting China, announced that Canada will import 49,000 Chinese electric vehicles at a preferential tariff rate (reducing the tariff from 100% to 6.1%). Autonomous driving: 2026 is expected to be the first year of commercialization of autonomous driving. Tesla's deployment of FSDV14 may have reached Level 4 autonomy, and expectations for relaxed policies are strengthening. This week, the U.S. House of Representatives held a hearing to discuss more lenient legislation on new car autonomous driving; Shanghai issued the "Momentum Intelligent Travel Action Plan" for high-level autonomous driving. The company is optimistic about the ability of OEMs and Tier 1 companies with integrated solutions, travel platforms and operators, chips, etc., which are independent and controllable, incrementally beneficial components such as LiDAR and wire-controlled chassis. The science and technology attributes of OEMs are expected to be revalued. Siasun Robot & Automation: The market continued to strengthen this week, with the video of Tesla's V3 prototype boosting market expectations. Key communications with core suppliers in the T-chain continue to progress, with a strengthening of verification and authenticity expected in the next 1-2 months. The sector is showing significant characteristics of narrowing, focusing on benefiting from the certainty and technological iteration of the T-chain. Subsequent tracking points for the sector include the interpretation of Tesla's annual report on January 28, the formal release and small-scale production of the V3 prototype in February-March, progress in preparing overseas supply chain capacity in the second quarter, large-scale production in the second half of the year, and progress in Yushu's listing. Commercial vehicles: Weichai Power's stock price showed strong performance this week, with major domestic factories gradually resuming AIDC construction bids, and large orders from factory B gradually being implemented. With the acceleration of the domestic substitution of computing cards, the scale of bids by major factories is expected to expand to 27-28, boosting market expectations for the growth of large bore diameter of diesel engines and their core components. In addition, Weichai's positioning in SOFC scarcity is promising for performance realization and valuation enhancement. The company also emphasizes the opportunity for Yutong Bus Co., Ltd.'s left-hand layout, with strong performance in new energy vehicle exports and strong performance certainty. The mid-term trend of rising export-driven momentum is clear, and with short-term industry off-season factors leading to a correction, they recommend buying. The current PE ratio for 2026 is only 12 times, with a dividend yield close to 5%.