Lyon: The Chinese automotive industry has seen a slight recovery in the second quarter. BYD Company (01211) and Geely Auto (00175) are the top choices.

Lyon released a research report stating that the overall performance of the Chinese automobile industry improved by the quarter in the second quarter, with domestic demand gradually recovering and strong export growth. However, the pace of recovery compared to the same period last year is uneven. It is expected that the domestic market will continue to recover in the second half of the year with seasonal factors. This will help drive industry valuations. The top picks are BYD COMPANY (01211) and GEELY AUTO (00175), as Lyon sees potential for continued growth in overseas sales and competitiveness of domestic car models. Lyon rates BYD Company Limited as highly confident to outperform the market. Similarly, Lyon maintains its forecast of 1.06 million overseas sales for Geely Auto for the year, with a target price of HK$30 and a high confidence rating to outperform the market. In addition, Lyon expects LEAPMOTOR (09863) to achieve breakeven in the second quarter with a target price of HK$60 and an outperform the market rating. The bank believes that the upcoming release of the Xpeng Motors-W (09868) MONA L03 can further solidify its competitive position in the 150,000 to 200,000 RMB electric vehicle market, giving it an outperform the market rating with a target price of HK$80. Given the strong momentum of new model orders for NIO-SW (09866), Lyon expects NIO to record a net profit of approximately RMB 39 million in the second quarter, giving it an outperform the market rating with a target price of HK$55.