Key Takeaways:
UOB Kay Hian raised its price target on BYD Co. to HKD135 from HKD120 while cutting targets for Geely Automobile Holdings and Great Wall Motor Co., as mixed June sales among China's five largest automakers showed export strength offsetting persistent domestic weakness.
"BYD and Geely outperformed peers on the back of overseas sales and electric vehicle performance, while GWM and Li Auto posted weaker-than-expected sales due to domestic pressure and model replacement cycles," the broker said in a July 3 report.
BYD, the broker's top Buy pick alongside Contemporary Amperex Technology, Geely, Minth Group and Ganfeng Lithium, saw June sales rise 5.5% from a year earlier to 403,472 vehicles, with overseas deliveries surging 94.7% to 175,349 units. That helped cushion a 22% decline in China sales. Geely also benefited from strong EV exports, while GWM and Li Auto struggled with model transition cycles and intensifying price competition in the domestic market.
The revisions reflect diverging fortunes among Chinese automakers as export momentum becomes the key differentiator. BYD Chairman Wang Chuanfu said last month the company aims to become the world's largest automaker within five years, pointing to export growth and battery technology advances. Li Auto, rated the sector's top Sell with a HKD40 target implying about 15% downside, faces headwinds from its model refresh cycle and domestic competition. The broker maintained an Equalweight rating on the sector, signaling selective opportunities rather than broad-based recovery.
For BYD holders, the raised target signals confidence in overseas expansion as a buffer against China's weak demand. Investors will watch the company's second-quarter earnings for updates on export margins and the timeline for its second European plant. For Li Auto, the Sell rating puts focus on whether its refreshed L series can reverse the sales trajectory in the second half.
This article is for informational purposes only and does not constitute investment advice.
