CLSA: Bullish on moderate recovery in China's auto market; gives BYD COMPANY (01211) and GEELY AUTO (00175) "High Conviction Outperform" ratings.

CLSA issued a research report stating that China's auto market has shown a moderate recovery, with BYD COMPANY (01211) driving most of the rebound, while other brands also recorded moderate growth. New model launches have injected vitality into the market, with orders for major brands rebounding 24% week-on-week last week, reversing the weak performance in the previous week after the holiday. Among them, mass-market orders grew 30% week-on-week, mainly driven by strong demand for BYD Company Limited's second-generation Seagull; orders for new automakers and premium brands such as NIO-SW (09866), XPeng-W (09868), and LI AUTO-W (02015) grew 7% and 9% week-on-week, respectively. However, the bank believes that the auto market as a whole is still in a bottoming-out phase, and expects October retail sales to remain well below last year's level. With anti-involution measures limiting room for further price cuts, new model launches will become the key driver of fourth-quarter sales, and a dense schedule of new car launches in the coming weeks is expected to provide some support. In terms of ratings and target prices, CLSA gave BYD Company Limited and GEELY AUTO (00175) "High Conviction Outperform" ratings with target prices of HK$109 and HK$22, respectively; and gave LEAPMOTOR (09863) an "Outperform" rating with a target price of HK$61.