China Securities Co., Ltd.: Sales volume compared to the previous month repaired, new energy maintained at a high level, actively laying out high-end scenarios and physical AI catalyzing.

China Securities Co., Ltd. released a research report stating that actively positioning in two types of markets: 1) The export of new energy passenger vehicles is strong. After the first quarter report, the soft domestic demand and expectations of rising raw material prices are expected to hit bottom. With a large number of new cars entering the market, domestic demand is expected to improve month-on-month, combined with high export prosperity. The progress of high-end and intelligent driving, Siasun Robot & Automation, and other new developments support the valuation center, and the undervalued vehicle sector is expected to usher in a more sustainable uptrend; 2) The physical AI (intelligent driving and Siasun Robot & Automation) sector currently has a cost-effective configuration. The adjustment amplitude from the beginning of the year is large, and the mid-year is a key point for related catalysts such as Tesla, including the release and mass production of Tesla Optimus V3, the scale operation of Robotaxi, expectation of FSD entry into China, and the IPO of Yushu. In addition, the improvement in risk bias and liquidity is expected to further strengthen the upward trend. China Securities Co., Ltd.'s main points are as follows: Passenger Cars: This week, L80 of Ludo, the new L9 series and ZhiJie V9 were officially launched. LBYD Company Limited's presale orders broke 100,000, and with new car supply driving demand, domestic demand is expected to reach a turning point in prosperity. The bank maintains its previous view that past investments in complete vehicles have focused on sales volume and profits exceeding expectations. The core focus is on policies and product cycles under a pro-cyclical property. Under the downward trend in demand cycles within 26 years, performance is optimistic about the two structural alphas of globalization and high-endization, and valuation is optimistic about the reshaping of technology attributes and growth space of physical AI. It recommends GEELY AUTO (acceleration in going abroad, high-endization, and undervaluation), BYD Company Limited (new energy leader going abroad), Anhui Jianghuai Automobile Group Corp., Ltd. (scarce super luxury), Xiaopeng Motors (leading progress in physical AI), and others. Commercial Vehicles: Continuously optimistic about the AI electric power main line (Weichai) and the high odds investment opportunities in the bus segment (Yutong, King Long). In Q2, Weichai's large-bore diesel is expected to accelerate its volume, combined with the imminent release of gas engines in the main electric field, the performance growth and valuation improvement are promising. The export of buses is subject to short-term fluctuations due to geopolitical conflicts, delivery rhythm, and other factors, but the medium-term trend of rising overseas volumes is clear. Based on the certainty of annual export growth and company performance realization, leading companies such as Yutong and King Long are at relatively low valuation levels, with limited downside potential and outstanding investment odds. In addition, given the trend of heavy truck export growth and the certainty of performance realization, the bank continues to highlight the opportunity to invest in the left layout of heavy trucks. Physical AI: Siasun Robot & Automation recently conducted a 7x24-hour live broadcast around Siasun Robot & Automation sorting, demonstrating its ability to work continuously autonomously in logistics scenarios. Vbot announced the completion of nearly 500 million yuan in Pre-A round financing, which is currently the largest single funding for consumer-level competitors. The bank assesses that the core line of Siasun Robot & Automation will focus on the "T-chain mass production rhythm & domestic main factory capitalization." T-chain: The mass production rhythm is gradually becoming clear, starting around late July to August; small batch orders continue to be issued. Recently, Chinese suppliers have successively gone to Thailand and other countries to prepare for production capacity. The first batch of suppliers will assess the preparation of overseas production capacity, with a view to increasing production capacity from Q3. Domestic: In addition to Yushu/Zhiyuan, the progress of capitalization of main factories such as DOBOT/Galaxy General/Cloud Deep Place/Zhengqian is expected to bring about a concentrated catalysis in the domestic chain. Overall, the bank believes that the industrial trend of Siasun Robot & Automation is clear, and in terms of investment strategy, it emphasizes long-term layout, bottom-up allocation, and focus on core assets. The bank sees value in the following target allocations, including high-success rate Tesla chain, incremental sectors of technological iterations and upgrades, and outstanding undervalued assets with expected differences; other domestic chains with capacity to increase volume, such as Yushu. Recommended combination: Anhui Jianghuai Automobile Group Corp., Ltd., GEELY AUTO, Weichai Power, Yutong Bus Co., Ltd., Xiamen King Long Motor Group, CAOCAO INC, Jiangling Motors Corporation, Hengbo Holdings, Wuxi Longsheng Technology, Zhejiang Sling Intelligent Drive Group, Ningbo Tuopu Group, Hexsai Technology. Risk factors 1. Industry prosperity lower than expected. 2. Policy implementation is lower than expected. 3. Export sales lower than expected. 4. Deterioration of industry competition. 5. Customer expansion and progress of new project production are lower than expected.