1

Sector Report

May 9, 2018

Kelly Zou—Analyst

(852) 3698-6319

kellyzou@chinastock.com.hk

Wong Chi Man—Head of Research

(852) 3698-6317

cmwong@chinastock.com.hk

China Autos: Still waters that run deep

Sea change in China’s auto industry. On the surface, auto sales may appear stagnant in

2018, with only single-digit growth; however there are strong undercurrents that herald

structural changes. The international luxury brands may remain strong, but the mid-end

segment is being squeezed by (i) the consolidation of local manufacturers, and (ii) waves

of well-capitalized new entrants with a technological edge. Aside from the emergence of

EVs, changes in technologies, materials, on-line distribution channels, used-cars sales,

auto-financing, and policies on foreign ownership will fundamentally transform the industry.

Front-row seat at the upheaval. We see a new pecking order in the industry emerging in

the next 24 months. As there is no substitute for diligent footwork in this fast-evolving

environment, we recently took our clients on a 360o tour across China, which included: (i) a

first-hand intro to new models at the Beijing Auto Show; (ii) meetings with innovative auto

manufacturers, such as Geely (175 HK); (iii) strategy discussions with new EV disruptors,

such as Byton, the NEV business arm of China Harmony Auto (3836 HK); (iv) visits to the

production facilities of auto-parts suppliers; (v) comparisons of traditional 4S shops and

online auto distribution platforms, such as Yixin Group (2858 HK); and (vi) discussions with

industry experts and consultants.

Leaders in the new hierarchy. In a period when consumers are spoiled with new car

choices, the market will rightly focus on new car models that have the desirability factor,

new EV and automation technology, performance and pricing. The schedule below shows

the introduction dates of the most-anticipated models. Many existing players will lose out

due to inadequate funding, poor technology, or even deteriorating partnerships (the OEM

JVs). However, the potential champions will require time to ramp up capacity and

distribution networks. We are therefore also positive on competitive auto-parts companies

Nexteer (1316 HK) and Shenzhen Inovance (300124 CH), and distribution/service

providers Yixin and Dah Chong Hong (1828 HK), which can take advantage of these

industry changes.

Key things to watch for in the next 12-18 months.

Source: CGIS Research

China auto and auto parts sector

2H18 1H19 2H19

CATL A-share listing

BAIC BAIC BJEV IPO in A-share in 3Q

Benz Launch of new China-made C-class, GLC and new A-class Local production of EQC EV in China

BMW Launch of China-made X3 model, X2 and X7 imported models and i3 and i8 models

Geely Launch of Lynk 02

Great Wall Launch of WEY VV6, WEY P8, WEY VV5s Hi4 and VV7s Hi4 and Haval new H4 Launch of ORA R2 EV

BYD Launch of new model Qing, Song EV and Yuan EV360 Launche of new EV compact sedan

NIO Launch of ES8 Plan to file for IPO in the US

WM Motor Product launch

Xpeng Launch of 1st sedan product

Byton Launche of its first SUV

2

Figure 1: China PV market share: local brands vs. JV brands

Source: CAAM, CGIS Research Source: CAAM, CGIS Research

Figure 2: China overall PV sales growth vs. NEV sales growth

OEMs– local brands and the new power of auto manufacturers

China passenger vehicle sales rose only 1.9% YoY in 2017, the lowest growth rate in at least a decade. The growth slow-down in

2017 was due to the end of tax incentives. With the government subsidy cut, auto sales growth will remain subdued in 2018. Having

said that, the growth will be seen mainly in rural areas, where car ownership is still low. Rising urbanization is expected to drive auto

sales growth faster than the market’s average growth.

Underneath the weak auto demand, changes in the industry hierarchy are taking place. Local OEMs have been gaining market share

from JV brands since 2013 (Fig 1). With product upgrades, local OEMs can provide products which are the best fit for consumer

demand in rural areas. In addition, with government support of NEV and smart vehicle development, auto manufacturers have

emerged with new power to become part of the auto industry force. We visited the Geely plant and met senior management during our

auto trip. We also met senior management of Byton at the auto show. Byton, the NEV investment arm of China Harmony, is a new

power in auto manufacturing. It recently entered into a strategic cooperation agreement with FAW Group.

Leveraging Volvo’s engineering resources, Geely offers products with a more compelling value proposition than its peers, not only

local ones, but also mid-end JV brands. With its multi-brand strategy, the Company is gaining market share in both the low-end

and mid- to high-end markets. Its best-selling vehicles include the Emgrand sedan, Borui SUV and Lynk 01. The Company plans

to launch the Lynk 02 in 2H18. The Company targets sales of Lynk models to reach 1.5m units in 2018, representing around a

20% YoY increase in sales.

Figure 3: Geely Concept Icon SUV at Beijing Auto Show

Source: CGIS Research Source: CGIS Research

34% 36% 34% 34% 35% 33% 32% 34% 35% 38% 42% 44% 46%

21% 23% 26% 24% 23% 22% 19% 18% 17%17%

16% 17% 17%

17%18% 18% 17% 18% 19% 22% 21% 21% 20% 19%

20% 21%13%

12% 10% 11% 12% 12% 14% 14% 14% 13% 12%12% 11%10% 6% 8% 10% 9% 10% 10% 10% 10% 8% 8% 5% 4%5% 4% 3% 3% 3% 3% 3% 3% 4% 4% 3% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18

Local Japanese German US Korean French

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

350.0%

400.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2010 2011 2012 2013 2014 2015 2016 2017 1Q18

PV NEV(rhs)

Figure 4: Geely Borui GE sedan at Beijing Auto Show

3

Figure 5: Geely Boyue SUV at its Ningbo Chunxiao plant

Source: CGIS Research Source: CGIS Research

Figure 6: Geely Lynk O2 crossover SUV at Beijing Auto Show

Figure 7: GAC Trumpchi GA4 SUV at Beijing Auto Show

Source: CGIS Research Source: CGIS Research

Figure 8: Great Wall WEY P8 SUV at Beijing Auto Show

Figure 9: Pricing and engine size comparison: Geely vs. peers

Model Engine size Price range (Rmb th,

factory instruction

price)

Category Model Engine size Price range (Rmb th,

factory instruction

price)

Category

Geely Emgrand GL 1.3T/1.4T/1.8L 78.8-115.8 Compact sedan Geely Boyue 1.8T/2.0L 100.3-140.2 Compact SUV

SAIC VW Lavida 1.2T/1.4T/1.6L 109.9-159.9 Compact sedan Lynk 01 2.0T 158.8-220.8 Compact SUV

FAW Toyota Corolla 1.2T/1.6L/1.8L 107.8-175.8 Compact sedan Lynk 02 na na Crossover SUV

Dongfeng Nissan Sylphy 1.6L/1.8L 99.8-159 Compact sedan SAIC VW Tiguan 1.4T/1.8T 199.8-237.8 Compact SUV

GAC Trumpchi GA4 1.3T/1.5L 73.8-115.8 Compact sedan FAW Toyota RAV4 2.0L/2.5L 179.8-269.8 Compact SUV

Geely Borui 1.8T/2.4L 119.8-179.8 Middle-class sedan Dongfeng Honda CR-V 2.0L 219.8-259.8 Compact SUV

SAIC VW Passat 1.4T/1.8T/2.0T 189.9-303.9 Middle-class sedan Great Wall WEY VV5 2.0T 150-163 Compact SUV

GAC Toyota Camry 2.0L/2.5L 179.8-279.8 Middle-class sedan Great Wall Haval H6 1.5T/2.0T 103-146.8 Compact SUV

Dongfeng Nissan Teana 2.0L/2.5L 175.8-298.8 Middle-class sedan GAC Trumpchi GS4 1.3T/1.5T 99.8-161.8 Compact SUV

GAC Honda Accord 1.5T/2.0L/2.4L 169.8-279.8 Middle-class sedan

GAC Trumpchi GA6 1.5T/1.6T/1.8T 102.8-196.8 Middle-class sedan

Source: CGIS Research

4

China’s NEV sales rose 53.3% YoY in 2017 to 777k units, making China’s world’s largest NEV market. Other than the leading NEV

players like BYD, SAIC and BAIC, there are new power for NEV and smart vehicle development emerging during recent years. At the

Beijing Auto Show, we have seen more than 170 new brands for their concept and soon-to-be-launched NEVs. With R&D team

funding from internet and high-tech companies, these so-called new power for vehicle manufacturing focuses only on R&D of NEVs

and smart vehicles. They try to come up with right NEV products with technology that can supersize the experience and functionality

of a smart phone. After all, they see huge commercial opportunities from peoples’ interaction with smart vehicles. So building a hit

vehicles mean they can sell their NEV or smart vehicle ecosystem, so they can find the commercial opportunities from people

interaction with their NEV or smart vehicles. But it still takes very long time for these new power to beat traditional OEMs for product

development and manufacturing. At current stage, we mainly see cooperation between traditional OEMs and these new power.

We met Byton at the auto show. Byton, along with WM Motor, Xpeng and NIO, are better positioned than other new powers,

considering they are well supported either by BAT or by traditional OEMs. Byton recently entered strategic alliance with FAW.

Byton, with R&D team coming from BMW, Tesla, Apple and Google and also recently FAW coming onboard, has different

strategy for its vehicle development. Byton puts its product development focus on smart vehicles instead of NEVs. At the show,

its concept SUV, which is to be launched to the market in Q4 2019, takes us to the forefront of connected mobility. The vehicle

offers users a fast and reliable connection with exterior data highway. Byton sets this SUV price at Rmb300k excluding

government subsidy, which we believe is not that demanding given the value proposition.

Figure 10: Reliability index for NEV models of new power of auto manufacturers

Source: QCTT, CGIS Research

Scoring criteria Scale

1 Production

Capability

2 Funding

3 Mass

Production

4 Senior

Management

5 Factory

6 Others 5 Scoring is discretionary based on actual situation.

15

15 points for receiving EV licenses from both Ministry of Industry and Information Technology (MIIT) and National

Development and Reform Commission (NDRC). 8 points for receiving one of the two. 4 points for outsoursing production to

OEM.

Guidance

Scoring is based on standing among all automakers in terms of funds raised.

0 point for concept cars. 8 points for being listed the catalogue of MIIT or in the process of application. 15 points for

completion of product launch and delivery to customers. Points can be adjusted discretionarily.

Factors such as joining of former senior management from high profile auto companies, experienced domestic and oversea

R&D team, teaming up with high profile internet companies will be took into consideration.

Scoring depends on the progress of the construction of manufacturing plant. 15 points for having any plant that has gone into

full operation. Points can be adjusted discretionarily.

Production

Capability Funding

Mass

Production

Senior

Management Factory

Government

Support

Core

Technolog Branding

Product

Strategy Innovation Total

1 WM Motor (EX6) 8 14 8 14 10 4 4 4 4 4 74

2 NIO (ES8) 4 8 14 14 13 4 4 4 4 4 73

3 Changjiang EV 15 8 8 10 14 4 4 3 3 4 73

4 Yudo Auto (π1/3/7) 15 2 14 10 13 4 3 4 4 3 72

5 Wanxiang EV (Revero) 8 4 14 14 13 4 4 4 4 2 71

6 Hozon Auto (Hozon @) 8 10 5 14 14 4 3 4 1 3 66

7 CH-Auto (Qiantu) 8 8 8 10 13 4 4 3 4 3 65

8 Xpeng (G3) 4 10 12 10 10 4 4 4 2 4 64

9 Dearcc (EV 10) 4 8 14 10 10 4 3 4 3 4 64

10 NEVS (9-3X) 8 8 8 10 12 4 4 2 4 3 63

11 Singulato (iS6) 0 10 8 10 10 4 4 4 4 4 58

11 Byton 0 14 0 14 10 4 4 4 4 4 58

5

Figure 11-12: Investor meetings at Dah Chong Hong’s Bentley dealer shop in Shanghai

Source: CGIS Research Source: CGIS Research

Auto distribution– traditional dealers and online auto service providers

We provided our investors with an opportunity to visit Dah Chong Hong and Grand Baoxin for channel checks. Most of dealers are

struggled with not only weak auto demand growth, but also poor margins on new car sales. Earnings growth is thereby increasingly

coming from their after-sales service business, especially from auto financing and used car sales. New car sales growth depends

increasingly on whether they can shift their revenue mix towards fast-growing premium brands, like Benz, Lexus and BMW.

We also met Yixin Group, the online auto service platform listed last year. The Company generates revenue from its online platform

facilitating both new and used car sales, auto financing, auto leasing and other after-sales services. Online and used-car sales are

increasingly popular with the young generation. At the current stage, competition between traditional dealers and online platforms is

still modest because the overlap of their customers is still very limited.

Figure 13: Audi, BMW, Benz’s 2017 new car sales growth in China

Source: Company data, CGIS Research Source: Company data, CGIS Research

Figure 14: Dah Chong Hong new car sales and revenue growth in 2017

2.9%

7.5%

32.9%

43.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

New car salesvolume

After-salesbusiness revenue

Auto financingrevenue

Auto leasingrevenue

25.9%

23.0%21.7%

16.4%15.1%

1.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Benz Jaguar LandRover

Lexus Infiniti BMW Audi

6

Figure 15: Grand Baoxin new car sales and revenue growth in 2017

Source: Company data, CGIS Research Source: Company data, CGIS Research

Figure 16: Yixin Group business segment revenue progression (Rmb m)

43.2%

32.7% 31.8%

0.0%

5.0%

10.0%

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New car sales volume New car sales revenue After-sales servicerevenue

206 65

212

1,276

964

2,942

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Transaction platform business Self-operated financing business

2015 2016 2017

7

Figure 17: Nexteer geographic sales growth in 2016-2017

Source: Company data, CGIS Research Source: Company data, CGIS Research

Figure 18: Nexteer operating profit margin trend

Auto parts– growing local auto parts companies

Auto parts companies in China are less mature than their global peers. But we think the auto parts sector is the most important sector

to look at first. The sector should have the opportunity to deliver high double-digit earnings growth, as local companies have the

opportunity to enjoy faster growth from their deep relationship with emerging local OEMs. Moreover, the central government’s support

for NEV and smart vehicle development should provide domestic parts companies with an opportunity to catch up with their global

peers.

We visited Nexteer, Shenzhen Inovance and Ningbo Gaofa during our trip.

Nexteer specializing in advanced steering and driveline systems, and has established itself as a tier 1 auto parts supplier to

leading OEMs, like GM, Fiat & Chrysler, BMW, Ford and PSA. Senior management suggests the Company will continuously

deliver faster-than-industry-average earnings growth by new customer accretion, sales expansion with existing customers, and

technology upgrades. The Company is strong in steering system development for advanced-driving assistance, which puts it in a

unique position in the China market.

Shenzhen Inovance is involved in the R&D of motor controllers for EVs in China. It has been supplying Yutong Bus exclusively

over the past six years. The motor controller business represented around 20% of its total revenue in 2017. Future growth will

come from its sales expansion into the passenger vehicle segment, which will still take time to reach critical mass to drive its

earnings growth.

Ningbo Gaofa specializes in the development, production and sales of low-tech electronic accelerator pedal assemblies, car cable

products, car manual/auto transmission shift cables, control level and dust cover products, electromagnetism fan clutch products,

etc. Its revenue grew at a CAGR of 28.1% over 2013-2017. Senior management guided that the Company can deliver >40%

business growth in 2018E, driven by further market share gains with leading OEMs in China. Its major customers are SAIC

Wuling, Geely, SAIC VW, FAW VW and Dongfeng Xiaokang. The Company also seeks ways to enhance its R&D capability in the

areas of auto parts development for NEVs and smart vehicles, seeing the rising importance of NEVs and smart vehicles.

13.4%16.7%

4.7%

16.4%

0.8%

-7.8%

50.4%

14.1%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

NA China APAC excl China Europe and SouthAmerica

2016 2017

7.2%

8.0%

9.3%

10.8%11.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

2013 2014 2015 2016 2017

8

Source: Company data, CGIS Research Source: Company data, CGIS Research

Figure 19: Shenzhen Inovance motor controller business revenue (Rmb m) Figure 20: Ningbo Gaofa revenue progression in 2013-2017

23

156

376

752

1,087 1,017

0

200

400

600

800

1,000

1,200

2012 2013 2014 2015 2016 2017

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

0

200

400

600

800

1000

1200

1400

2013 2014 2015 2016 2017

Revenue(Rmb m) % YoY chg (rhs)

9

Source: Bloomberg, CGIS Research, Note: based on closing prices on 8 May 2018

Figure 21: OEM and dealer company peer comparison

Ticker Mkt cap Price PEG

US$ m (lc)2017 2018E 2019E 2017 2018E 2019E 2018E 2017 2018E 2019E 2017 2018E 2019E 2017 2018E 2019E

Geely 175 HK 26,239 22.95 15.6 12.2 8.8 105.3% 28.0% 29.4% 0.4 4.8 3.7 2.8 1.3% 1.8% 2.3% 31.0% 30.2% 30.1%

BYD 1211 HK 20,897 52.55 28.6 22.7 17.8 -20.7% 25.8% 27.7% 0.9 2.3 1.9 1.7 0.3% 0.8% 1.0% 8.0% 8.4% 9.8%

Great Wall 2333 HK 13,686 8.10 11.9 7.8 6.9 -52.6% 53.3% 13.2% 0.1 1.2 1.1 1.0 2.6% 3.9% 4.5% 10.2% 13.9% 14.1%

GAC 2238 HK 18,419 13.82 6.7 6.0 5.3 71.4% 11.8% 13.0% 0.5 1.2 1.0 0.9 4.7% 5.1% 5.8% 17.6% 17.3% 17.0%

Brilliance 1114 HK 9,525 14.82 13.9 8.7 6.8 18.7% 59.1% 28.4% 0.1 2.3 1.8 1.4 0.0% 1.4% 1.8% 16.5% 20.6% 21.3%

Dongfeng 489 HK 9,363 8.53 4.2 4.3 4.1 5.4% -1.0% 4.3% -4.3 0.6 0.5 0.4 5.1% 4.5% 4.7% 13.0% 11.4% 10.7%

BAIC 1958 HK 7,771 7.61 20.6 6.8 5.4 -64.3% 200.7% 26.5% 0.0 1.1 1.0 0.9 1.6% 4.6% 6.0% 5.6% 14.2% 16.0%

SAIC 600104 CH 62,487 34.06 11.5 10.4 9.6 1.9% 10.4% 8.8% 1.0 1.8 1.6 1.5 5.4% 5.9% 6.4% 15.3% 15.6% 15.5%

Chongqing Changan 000625 CH 7,178 10.33 6.9 6.0 5.8 -32.0% 16.1% 2.5% 0.4 1.0 0.9 0.8 4.3% 5.0% 5.4% 15.0% 15.5% 14.5%

Great Wall 601633 CH 13,686 11.08 20.1 13.3 11.6 -52.6% 51.5% 14.6% 0.3 2.1 1.8 1.6 1.5% 2.3% 2.5% 10.2% 13.6% 13.9%

GM GM US 51,219 36.34 -13.7 5.7 5.7 na -340.3% 0.3% 0.0 1.5 1.3 1.1 4.2% 4.2% 4.3% na 23.0% 19.4%

Ford FORD US 14 1.50 21.4 na na 0.0% na na na 1.5 na na 0.0% na na 7.0% na na

Toyota 7203 JP 213,739 7,155 8.9 10.1 9.4 32.6% -12.0% 8.1% -0.8 1.1 1.0 1.0 3.0% 3.1% 3.2% 12.7% 10.3% 10.3%

Honda 7267 JP 60,199 3,630 6.4 8.9 8.3 66.1% -28.3% 7.9% -0.3 0.8 0.8 0.7 2.8% 3.2% 3.4% 12.5% 8.4% 8.4%

Nissan 7201 JP 43,007 1,113 6.1 7.6 7.0 10.8% -20.1% 8.7% -0.4 0.8 0.7 0.7 4.8% 4.9% 5.1% 13.2% 9.8% 9.9%

BMW BMW GR 70,783 91.81 7.0 8.1 7.8 25.6% -14.0% 3.8% -0.6 1.1 1.0 1.0 4.4% 4.3% 4.5% 15.9% 12.8% 12.2%

VW VOW GR 102,202 170.50 7.5 6.4 6.0 121.0% 17.9% 6.3% 0.4 0.9 0.7 0.7 1.2% 3.2% 3.7% 11.6% 11.3% 10.9%

Hyundai 005380 KS 31,814 156,000 10.4 10.2 8.5 -25.5% 1.7% 19.7% 6.1 0.5 0.6 0.6 2.6% 2.8% 3.1% 4.5% 5.8% 6.7%

Kia 000270 KS 12,704 33,850 14.0 7.6 6.4 -64.9% 83.4% 20.2% 0.1 0.5 0.5 0.5 2.4% 2.9% 3.4% 3.6% 6.3% 7.2%

Zhongsheng Group 881 HK 6,931 24.00 12.8 10.9 8.8 74.7% 17.6% 17.6% 0.6 2.8 2.3 1.9 1.8% 2.0% 2.4% 21.7% 21.0% 20.7%

China Yongda 3669 HK 1,953 8.35 7.4 6.2 8.8 56.9% 20.1% 24.7% 0.3 1.5 1.2 1.0 2.8% 4.8% 6.0% 20.1% 19.3% 20.9%

China Zhengtong 1728 HK 1,987 6.26 9.4 7.2 8.8 141.3% 31.2% 29.2% 0.2 1.1 1.0 0.9 2.2% 3.5% 4.4% 11.9% 14.0% 15.7%

Grand Baoxin 1293 HK 1,251 3.46 9.4 4.3 8.8 87.5% 116.3% 22.3% 0.0 1.2 1.0 0.9 3.6% 2.5% 3.2% 12.5% 23.5% 24.8%

Dah Chong Hong 1828 HK 965 4.10 9.4 8.0 8.8 56.7% 17.8% 12.6% 0.4 0.7 0.7 0.7 4.1% 5.1% 5.6% 8.0% 8.7% 9.3%

China Harmony 3836 HK 845 4.31 na 7.5 8.8 na na 17.5% na na 0.8 0.7 na 2.7% 3.1% na 10.9% 11.5%

Yixin Group 2858 HK 3,190 3.99 -0.3 32.7 8.8 na -100.9% 179.8% -0.3 1.3 1.3 1.1 0.0% 0.0% 0.0% na 3.9% 9.8%

PER EPS growth P/Bk

International auto companies

H-share auto service companies

H-share auto companies

A-share auto companies

Dividend yield ROE

10

Source: Bloomberg, CGIS Research, Note: based on closing prices on 8 May 2018

Figure 22: Auto parts company peer comparison

Ticker Mkt cap Price PEG

US$ m (lc)2017 2018E 2019E 2017 2018E 2019E 2018E 2017 2018E 2019E 2017 2018E 2019E 2017 2018E 2019E

Nexteer 1316 HK 3,594 11.26 10.2 9.5 8.8 16.7% 7.9% 11.3% 1.2 2.6 2.1 1.8 2.0% 2.2% 2.4% 25.0% 22.5% 20.8%

Minth 425 HK 5,438 37.30 17.0 14.2 11.8 16.0% 19.9% 20.3% 0.7 2.8 2.5 2.3 2.3% 2.7% 3.2% 16.8% 17.9% 19.2%

Xin Point 1571 HK 722 5.63 10.4 9.6 7.9 na 8.0% 21.1% 1.2 2.3 2.0 1.7 2.6% 3.4% 4.1% 22.6% 20.8% 22.0%

Huayu Automotive 600741 CH 12,076 24.39 11.7 9.9 9.7 7.9% 18.9% 1.6% 0.5 1.9 1.7 1.5 4.3% 5.2% 5.4% 15.9% 17.0% 15.7%

Tianqi Lithium 002466 CH 10,189 56.81 29.3 23.8 18.0 40.6% 22.8% 32.1% 1.0 6.2 5.7 4.4 0.4% 0.4% 0.6% 21.1% 23.7% 24.5%

Zhejiang Huayou Cobalt 603799 CH 9,609 103.24 32.3 22.7 18.2 na 41.8% 24.7% 0.5 10.2 7.2 5.1 0.5% 0.0% na 31.5% 31.5% 28.0%

Shenzhen Inovance 300124 CH 8,841 33.83 52.0 41.5 33.1 10.2% 25.5% 25.2% 1.6 10.4 8.7 7.4 0.9% 1.0% 1.3% 19.9% 21.0% 22.3%

Ningbo Joyson Electronic 600699 CH 4,094 27.46 65.4 21.7 18.2 -36.4% 201.9% 19.0% 0.1 2.1 1.9 1.7 0.4% 1.1% 1.4% 3.1% 8.6% 9.4%

Ningbo Shanshan 600884 CH 3,613 20.49 25.7 24.4 19.6 99.5% 5.1% 24.9% 4.8 2.2 2.2 1.9 0.3% 0.7% 0.9% 8.6% 8.9% 10.0%

Guoxuan High-Tech 002074 CH 3,202 17.94 na 19.4 16.6 na na 17.0% na na 2.4 2.1 na 0.6% 0.7% na 12.2% 12.7%

Ningbo Tuopu Group 601689 CH 2,275 19.91 18.8 15.6 12.7 11.6% 20.3% 23.0% 0.8 2.2 2.1 1.9 0.0% 1.8% 2.1% 11.9% 13.7% 14.8%

Ningbo Huaxiang Electronic 002048 CH 1,377 14.00 na 9.6 7.8 na na 24.2% na na 0.9 0.8 na 0.3% 0.3% na 9.4% 9.9%

Beijing WKW Automation 002662 CH 1,201 5.10 24.2 4.5 na -50.3% 435.2% na 0.0 1.5 na na 3.9% na na 6.2% na na

Ningbo Gaofa 603788 CH 1,084 42.00 26.4 21.8 17.2 40.7% 21.0% 27.2% 1.0 3.7 3.4 3.0 2.4% 1.8% 1.8% 14.1% 15.4% 17.3%

Continental CON GY 54,154 228.30 15.3 13.6 12.3 6.5% 12.6% 10.9% 1.1 2.9 2.4 2.1 2.0% 2.2% 2.4% 18.9% 17.9% 17.4%

Denso 6902 JP 40,722 5,597 na 13.5 12.4 na na 9.0% na na 1.1 1.1 na 2.5% 2.7% na 8.5% 8.7%

Magna MGA US 21,712 60.81 10.3 9.0 8.2 14.3% 13.9% 10.1% 0.6 1.9 1.7 1.5 1.8% 2.0% 2.1% 18.9% 18.8% 18.3%

Borgwarner BWA US 10,335 49.19 23.5 11.1 10.3 280.0% 111.2% 7.8% 0.1 2.8 2.4 2.1 1.2% 1.4% 1.4% 11.9% 21.1% 20.0%

Toyota Boshoku 3116 JP 3,816 2,219 na 9.6 8.9 na na 7.2% na na 1.4 1.2 na 2.5% 2.7% na 14.5% 13.8%

Hyundai Wia 011210 KS 1,374 54,500 -23.0 16.3 9.0 na na 81.0% -0.1 0.5 0.5 0.4 1.1% 1.5% 1.6% -2.0% 2.8% 4.9%

PER EPS growth P/Bk

International auto parts companies

H-share auto parts companies

A-share auto parts companies

Dividend yield ROE

11

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BUY share price will increase by >20% within 12 months in absolute terms :

SELL share price will decrease by >20% within 12 months in absolute terms :

HOLD no clear catalyst, and downgraded from BUY pending clearer signal to reinstate BUY or further downgrade to outright SELL :