JP Morgan downgrades Fuyao Glass Industry Group (03606) to "Neutral" and recommends MINTH GROUP (00425) as the top pick in the industry.

J.P. Morgan released a research report stating that Chinese auto parts manufacturers may face a challenging market environment in the coming year, primarily due to multiple pressures including the slowdown in domestic auto and electric vehicle production growth, RMB appreciation, and rising prices of commodities. The bank downgraded the rating of Fuyao Glass Industry Group (03606) to "Neutral" as although the company still maintains over 80% market share in the Chinese market, signs indicate that industry competition is intensifying, and its target price was lowered from HK$80 to HK$70. MINTH GROUP (00425) remains the top pick for the bank, and is the only stock in the Chinese auto parts sector to maintain a "Buy" rating. This is mainly based on its strong presence and business percentage in the EU electric vehicle market, as well as its attractive valuation level (forecasted P/E ratio of 11 times in 2026) - the current valuation does not fully reflect its potential upside in AI server liquid cooling or humanoid Siasun Robot & Automation business opportunities. The target price is HK$70. Outside of the auto parts sector, the bank is bullish on the battery supply chain, due to its high business coverage in the energy storage system field (with growth expected to exceed 40%), with Contemporary Amperex Technology (03750) and Yunnan Energy New Material (002812.SZ) maintaining a "Buy" rating.