Investment Highlights - The automotive industry is expected to see a recovery in passenger vehicle demand in Q1 2026 due to the implementation of subsidy policies, with a focus on high-end electric vehicles and established export-oriented companies [3][4][5][34] - The heavy truck sector benefits from a new policy that maintains subsidy levels, with expectations of 800,000 to 850,000 units sold domestically in 2026, reflecting a 3% year-on-year increase [4][29][38] - The bus sector anticipates a slight increase in sales to 40,000 units in 2026, supported by the continuation of subsidy policies [4][28][38] - The motorcycle market is projected to grow, with total industry sales expected to reach 19.38 million units in 2026, a 14% increase year-on-year, driven by strong export growth [5][35] Passenger Vehicle Sector - The implementation of subsidy policies is expected to convert pent-up demand into sales, with a focus on companies less sensitive to policy changes, such as Jianghuai Automobile and high-end brands like Geely and Great Wall [3][34] - The domestic market is expected to prioritize stability, while exports will focus on companies with proven execution capabilities, such as BYD and Changan [3][34] Heavy Truck Sector - The new policy for heavy trucks has exceeded expectations, maintaining subsidy levels from 2025, which is anticipated to accelerate the rollout compared to previous years [4][29][38] - The domestic sales forecast for heavy trucks in 2026 is optimistic, with expectations of 80,000 to 85,000 units sold, reflecting a 3% increase year-on-year [4][29][38] Bus Sector - The bus sector's subsidy policy has also exceeded expectations, with sales projected to reach 40,000 units in 2026, a 5% increase year-on-year [4][28][38] - The market anticipates a continued push for electric buses, supported by government incentives [28][38] Motorcycle Sector - The motorcycle market is expected to see significant growth, particularly in the large-displacement segment, with total sales projected at 1.26 million units in 2026, a 31% increase year-on-year [5][35] - Exports are expected to rise significantly, with a forecast of 830,000 units in 2026, reflecting a 50% increase [5][35] Overall Market Outlook - The overall automotive market is projected to grow, with total industry sales expected to reach 19.38 million units in 2026, a 14% increase year-on-year [5][35] - The heavy truck and motorcycle sectors are particularly well-positioned for growth due to favorable policy environments and increasing export opportunities [4][5][35]

Market Overview - The smart car index decreased by 6.2%, while the index excluding Tesla increased by 0.2%. As of December 31, 2025, the smart car index PS (TTM) is 14.1x, ranking in the 96th percentile since the beginning of 2023. The index excluding Tesla has a PS (TTM) of 6.4x, ranking in the 90th percentile since the beginning of 2023 [4][12][17]. Industry Core Changes - Pony.ai's Robotaxi fleet has surpassed 1,159 vehicles, exceeding the target of 1,000 Robotaxis by 2025. Tesla's FSD version 14.2 completed a 2-day, 20-hour journey across the U.S. without human intervention [6][12][21]. Investment Recommendations - The company maintains a strong outlook for the L4 RoboX theme in 2026, favoring B-end software stocks over C-end hardware stocks. Preferred H-shares include Xpeng Motors, Horizon Robotics, Pony.ai, WeRide, and Cao Cao Mobility. A-shares recommendations include Qianli Technology, Desay SV, and Jingwei Hirain [6][12][21]. Downstream Application Targets - For Robotaxi perspectives, the integrated model includes Tesla and Xpeng Motors, while the technology provider and operational sharing model includes Horizon Robotics, Baidu, Pony.ai, WeRide, and Qianli Technology. The transformation of ride-hailing and taxi services involves Didi, Cao Cao Mobility, Ruqi Mobility, and others [6][12][21]. Upstream Supply Chain Targets - Key targets in the B-end unmanned vehicle OEM sector include BAIC BluePark, GAC Group, Jiangling Motors, and others. Core upstream suppliers include testing services (China Automotive Research), chips (Horizon Robotics, Black Sesame Technology), domain controllers (Desay SV, Jingwei Hirain), sensors (Sunny Optical Technology, Hesai Technology), and others [6][12][21].

Investment Highlights - The SW Auto Parts Index increased by 2.91% this week, ranking first in the SW automotive sector, with a year-to-date increase of 42.58% [2][12] - The latest trading day saw the SW Auto Parts PE (TTM) at the 79.44% historical percentile and PB (LF) at the 75.50% historical percentile [12][33] Robotics Sector Review - The Wande Robotics Index rose by 3.73% this week, with a year-to-date increase of 62.08%, outperforming the SW Auto Parts sector by 0.83% [3][12] - The latest trading day recorded the Wande Robotics PE (TTM) at the 68.31% percentile for the year 2025, and PB (LF) at the 79.42% percentile [3][44] Core Coverage Changes - Yinchuan Co. increased its investment in Sichuan Yinchuan by 380 million yuan for capacity construction of water-cooled plates and front-end modules, expected to reach production by 2029 [4][12] - Huada Technology announced a mid-term dividend plan for 2025, proposing a cash dividend of 0.15 yuan per share, totaling 70.46 million yuan [4][12] - Fuda Co. completed the transfer of 25% equity in Guilin Fuda Alfin for 48 million yuan [4][12] Weekly Performance of Core Coverage Stocks - The top five performing stocks this week were: Xinquan Co. +14.05%, Beite Technology +11.64%, Top Group +8.26%, Daimai Co. +8.01%, and Xinz坐标 +7.97% [5][12] Investment Recommendations - For auto parts, focus on structural opportunities by selecting product-oriented companies and those entering high-value sectors to increase ASP, with a priority on companies expanding capacity in Europe, North America, and Southeast Asia [7][12] - In robotics, look for certainty opportunities with the expected release of Optimus V3 in Q1 2026, and monitor the order timeline and application deployment by domestic companies like Xiaopeng and Yuzhu [7][12] - Recommended stocks based on EPS include Fuyao Glass, Xingyu Co., Minshi Group, Junsheng Electronics, and Xingyuan Zhuomei, with a focus on Xinquan Co. [7][12] - Recommended stocks based on PE include Top Group, Junsheng Electronics, Shuanghuan Transmission, Minshi Group, Yinchuan Co., and Feilong Co., with a focus on Yap Co. and Daimai Co. [7][12]

Core Insights - The article reflects on the evolution and growth of the Dongwu Automotive team over the past decade, emphasizing the journey of self-discovery and the establishment of a cohesive team [2][4][6]. Group 1: First Decade (2013-2022) - The first decade was characterized by a process of self-exploration and trial-and-error, navigating through the SUV boom and the rise of electric vehicles, ultimately leading to a clearer direction for the team [2]. - The team achieved recognition as the second-best automotive analyst in the New Fortune awards in 2022, marking a significant milestone in their growth [2]. Group 2: Transition Period (2023-2025) - The years 2024-2025 are anticipated to bring further accolades, with expectations of being recognized as the top automotive analyst, although the team acknowledges that this success is not built on a solid competitive advantage but rather on luck [4]. - The team aims to embrace a new goal of "seeking common ground while allowing for differences," recognizing the balance between personal growth and team development [4]. Group 3: Second Decade (2026-2035) - Starting in 2026, the team will focus on each member's journey of self-discovery and contribution, with a vision to witness the global rise of the Chinese automotive industry and serve the capital market [6]. - The team's philosophy emphasizes independent thinking, objectivity, and foresight, with a flexible framework that encourages innovation and iteration [6]. - The team plans to release an updated division of labor annually to better serve the capital market and the automotive industry, inviting collaboration and internships [6]. Group 4: Team Structure and Expertise - The team is structured into three main segments: smart automotive full industry chain, large vehicles (electrification & globalization), and automotive parts & robotics, each led by experienced analysts [7][9][13][18][20]. - Analysts within the team focus on various aspects of the automotive industry, including technology iteration, market demand, and investment opportunities, ensuring a comprehensive approach to research and analysis [9][11][18][20].

Investment Highlights - The automotive sector has shown positive performance this week, with the SW passenger vehicle and SW auto parts sectors leading with gains of +3.3% each, followed by SW automotive (+2.7%) and SW commercial vehicles (+1.1%), while SW commercial passenger vehicles declined by -2.2% [4][12] - The top-performing stocks this week include Yatong Co., Hengshuai Co., Xusheng Group, Yinlun Co., and Shuanghuan Transmission [4][12] Research Outcomes - The team has released a strategy report for automotive parts for 2026 and a monthly report on buses [5][12] Industry Core Changes 1. Xiaopeng Motors collaborated with Peking University to publish a paper at the international AI conference AAAI 2026, addressing the core contradiction of high computational load and precise decision-making in autonomous driving, showcasing both technological breakthroughs and commercial feasibility [6][12] 2. Horizon Robotics launched the S100P mass production of the Digua robot and officially released the Vbot super robot dog [6][12] 3. The Zhiji brand is expected to achieve full-cost profitability for the first time by December 2025 [6][12] Current Automotive Sector Configuration - The automotive industry is entering a new crossroads phase, with the end of the electric vehicle (EV) dividend and the dawn of automotive intelligence, while robotics innovation is in the 0-1 stage. Three main investment opportunities are emerging during this transition [8][13] - **AI Smart Vehicle Main Line**: Focus on Robotaxi/van, with downstream application core targets including: - **Robotaxi Perspective**: Integrated models like Tesla, Xiaopeng Motors, and Qianli Technology; technology providers with operational sharing models like Horizon Robotics and Baidu; transformation of ride-hailing/taxi services with companies like Cao Cao Mobility, Didi, and others [8][13] - **Robovan Perspective**: Key focus on Desay SV and others [8][13] - **C-end Vehicle Sales Perspective**: Whole vehicles from Xiaopeng Motors, Li Auto, Huawei, Xiaomi, etc. [8][13] - **Upstream Supply Chain Core Targets**: B-end vehicle manufacturing by companies like BAIC Blue Valley, GAC Group, and SAIC Group; core suppliers in testing, chips, domain controllers, sensors, and more [8][13] - **AI Robotics Main Line**: Preferred components from Top Group, Junsheng Electronics, Xinquan Technology, and others [8][13] - **Dividend & Good Pattern Main Line**: Focus on buses (Yutong Bus), heavy trucks (China National Heavy Duty Truck Group, Weichai Power), and two-wheelers (Chunfeng Power, Longxin General) [9][13]

Core Viewpoint - The overall Beta of the automotive parts sector is expected to weaken in 2026, with structural opportunities being more favorable than total opportunities. The humanoid robot sector opens up valuation elasticity for automotive parts, focusing on three main technology lines: "Intelligent Driving (L2++/L3/L4) + Liquid Cooling (AIDC) + Humanoid Robots," along with the long-term certainty of "going overseas." Traditional advantageous tracks should be selectively laid out based on "performance realization + new order production" [3][8]. EPS Dimension - In the existing market, companies with high competitiveness that enhance market share and those that enter high-value tracks through internal and external expansion to increase ASP should be prioritized. The globalization of automotive parts opens up growth space, with a focus on production capacity in Europe, North America, and Southeast Asia, significantly enhancing growth potential and risk resistance. Companies are expected to transition to global Tier 1/platform leaders between 2026-2030. Recommended companies include Fuyao Glass, Xingyu Co., Minth Group, Joyson Electronics, and Xingyuan Zhuomag, with New Spring Co. as a focus [4][8]. PE Dimension - Intelligent Driving: The penetration of L2++ is accelerating, with L3 regulations and urban NOA speeding up, and L4-level smart vehicles rapidly landing. Focus on chip + domain control + core sensors + steer-by-wire chassis (systematic capabilities in cost/algorithm/safety redundancy). Recommended companies include Horizon Robotics, Black Sesame, and Desay SV. Companies to watch include Bertel and Nexperia [5][9]. - Robotics: Transitioning from "0→1" to "1→10," benefiting from large models + actuators/reducers/lead screws/force sensors, with a focus on automotive parts leaders that have "technological synergy + manufacturing collaboration." Recommended companies include Top Group, Minth Group, and Shuanghuan Transmission, with a focus on Yapu Co. and Daimay Co. [5][9]. - Liquid Cooling: AI capital expenditure growth and AIDC power consumption increase; the liquid cooling temperature control market is expected to reach hundreds of billions by 2030. Automotive parts should focus on thermal management/pipes/quick connectors, emphasizing system integration and cost reduction capabilities. Recommended companies include Minth Group, Yinlun Co., and Feilong Co. [5][9]. Emerging Industries - The expansion of emerging industries is expected to be less than anticipated, with downstream demand also falling short of expectations, and increasing geopolitical uncertainties [7]. Globalization - The global light vehicle market has a capacity of nearly 80 million units. The overseas light vehicle market is vast, with the 2024 overseas light vehicle production expected to reach 51.7 million units, accounting for 66% of the global market. The globalization of automotive parts is crucial for achieving significant revenue scales [47][49][50]. Conclusion - The automotive parts sector is entering a phase where structural opportunities are prioritized over total market growth. Companies focusing on intelligent driving, robotics, and liquid cooling technologies are expected to lead the way, while globalization will enhance growth potential and resilience against risks [3][4][5][8].

Core Viewpoint - The bus industry represents China's automotive manufacturing sector becoming a global leader in technology output, with overseas market contributions expected to recreate a market equivalent to China within 3-5 years [4][15]. Group 1: Driving Factors for the Bus Industry Cycle - Timing: The bus sector aligns with the national strategy of "China's Special Valuation" and is a strong proponent of the "Belt and Road" initiative, having over a decade of overseas experience [4][15]. - Location: The technology and products of Chinese buses are at a world-class level, leading in new energy buses and competitive in traditional buses [4][15]. - People: The end of the domestic price war is expected to resonate positively, with demand recovering due to tourism and public transport renewal needs [4][15]. Group 2: Profitability Outlook - The absence of a price war domestically, an oligopolistic market structure, and better profit margins in overseas markets contribute to the potential for high profitability [5][16]. Group 3: Market Value Potential - The short-term goal is to challenge the market value peak from 2015-2017, while the long-term goal is to establish a new ceiling for the world's bus industry [6][16]. Group 4: Investment Recommendations - Yutong Bus is highlighted as a "model student" with high growth and dividend attributes, with projected net profits of 4.94 billion, 5.92 billion, and 7.03 billion yuan for 2025-2027, reflecting year-on-year growth of 20%, 20%, and 19% respectively [7][13]. - King Long Automobile is noted as the "fastest improving student," with significant profit elasticity, projected net profits of 440 million, 640 million, and 830 million yuan for 2025-2027, with year-on-year growth of 182%, 45%, and 28% respectively [8][13]. Group 5: Industry Performance Data - In November 2025, the overall bus production in China was 55,000 units, with a year-on-year increase of 14.90% and a month-on-month increase of 10.47% [19][21]. - The wholesale volume for the same month was 53,000 units, reflecting a year-on-year increase of 15.78% and a month-on-month increase of 7.28% [21]. - The terminal sales for buses reached 49,000 units, with a year-on-year increase of 7.91% and a month-on-month increase of 4.60% [22][21].

Core Viewpoint - The automotive industry is at a crossroads, with the end of the electric vehicle (EV) boom and the dawn of automotive intelligence, presenting three main investment opportunities: AI smart vehicles, AI robots, and traditional vehicle segments [7][14]. Weekly Sector Performance - This week's sector performance ranked SW motorcycles and others at +1.1%, SW commercial passenger vehicles at +0.9%, SW auto parts at +0.3%, SW automobiles at -0.1%, SW passenger vehicles at -1.4%, and SW commercial freight vehicles at -1.7% [4][13]. - The top five stocks covered this week with the highest gains were Jingwei Hengrun-W, Asia-Pacific Shares, Junsheng Electronics, Desay SV, and BAIC Blue Valley [4][13]. Research Achievements - The team released several reports this week, including the 2026 automotive strategy report, the first coverage report on Minshi Group, the November Shenzhen test drive report, and the heavy truck monthly report [5][13]. Key Industry Changes 1. On December 15, Changan Automobile's Deep Blue brand received approval for L3-level autonomous driving capabilities, and BAIC New Energy's Arcfox Alpha S (L3 version) was also approved for autonomous driving [6][13]. 2. Saudi Red Sea Global Group and SIXT purchased nearly 200 Yutong pure electric buses, with the first batch of 90 now operational in the Red Sea region [6][13]. 3. On December 16, XPeng Motors obtained a road test license for L3-level autonomous driving in Guangzhou, allowing testing on designated high-speed road sections [6][13]. Current Automotive Sector Configuration - The automotive sector is transitioning, with the electric vehicle boom nearing its end and a shift towards automotive intelligence. Investment opportunities include: - **AI Smart Vehicle Focus**: - Robotaxi and Robovan models leading the way, with key players like Tesla, XPeng Motors, and Qianli Technology [7][14]. - Downstream applications include integrated models, technology providers, and the transformation of ride-hailing services [7][14]. - **Upstream Supply Chain Focus**: - Key players in vehicle manufacturing and core suppliers, including testing, chips, domain controllers, sensors, and more [7][14]. - **AI Robot Focus**: - Preferred components from companies like Top Group, Junsheng Electronics, and others [7][14]. - **Traditional Vehicle Focus**: - Opportunities in buses (Yutong), heavy trucks (China National Heavy Duty Truck Group, Weichai Power), and motorcycles (Chunfeng Power, Longxin General) [10][14].

Core Viewpoint - The automotive industry is at a new crossroads in 2026, with the end of the electric vehicle (EV) boom and the rise of smart technology. Investment opportunities lie in commercial vehicles and two-wheeled vehicles, focusing on finding resilient alpha varieties and embracing the next industrial trends of smart technology and robotics/AIDC [4][10]. Group 1: Automotive Sector Investment Strategy - The automotive industry should reference the years 2011 and 2018 for strategic insights. The focus is on finding resilient alpha varieties and embracing the next industrial trends, particularly in smart technology and robotics/AIDC [4][10]. - The total domestic demand for passenger vehicles in 2026 is expected to be 22 million units, a decrease of 3.5% year-on-year, while the demand for new energy vehicles is projected to reach 13.2 million units, an increase of 6.4% [5][10]. - The wholesale sales of heavy trucks are forecasted to be 1.16 million units in 2026, with a year-on-year increase of 1.5%. Domestic sales are expected to decline by 5.5% to 770,000 units, while exports are projected to rise by 18.8% to 390,000-400,000 units [5][27]. Group 2: Key Investment Opportunities - In the bus sector, the top picks are Yutong Bus and Jinlong Automobile. For motorcycles, the preferred choices are Chunfeng Power and Longxin General. In the heavy truck sector, China National Heavy Duty Truck and Weichai Power are favored. For passenger vehicles, BYD is the primary choice, with Jianghuai Automobile as a secondary option. In the parts sector, Fuyao Glass, Xingyu Co., and Minth Group are recommended [6][10]. - The L4 RoboX investment opportunities focus on the B-end software sector over C-end hardware. Preferred stocks include XPeng Motors, Horizon Robotics, and others in the H-share market, while A-share selections include Qianli Technology and Desay SV [7][10]. - The robotics and AIDC investment opportunities are highlighted, with a focus on the upcoming Optimus V3 overseas and the rapid development of domestic robotics. Key selections include Top Group for robotics and liquid cooling, and Junsheng Electronics for robotics [7][10]. Group 3: Market Forecasts - The passenger vehicle market is expected to see a total sales volume of 22 million units in 2026, with a year-on-year decrease of 3.5%. New energy vehicle sales are projected to reach 13.2 million units, an increase of 6.4% [5][17]. - The heavy truck market is forecasted to have a wholesale volume of 1.16 million units in 2026, with domestic sales declining by 5.5% to 770,000 units, while exports are expected to rise by 18.8% [5][27]. - The bus sector is anticipated to maintain a strong export growth rate of over 30%, with domestic sales expected to reach 81,000 units, a year-on-year increase of 3% [5][32]. Group 4: Motorcycle Market Insights - The motorcycle industry is projected to have total sales of 19.38 million units in 2026, a year-on-year increase of 14%. The large-displacement motorcycle segment is expected to reach 1.26 million units, a 31% increase [5][34]. - Domestic sales of large-displacement motorcycles are expected to reach 430,000 units, a 5% increase, while exports are projected to be 830,000 units, a 50% increase [5][35]. Group 5: Future Trends and Innovations - The penetration rate of smart driving technology in new energy vehicles is expected to rise to 40% by 2026, with significant growth in the use of domestic chips [22][23]. - The heavy truck export market is expected to recover, with significant growth in regions such as Southeast Asia and Africa, driven by local infrastructure and mining demands [28][29].

Core Viewpoint - Minth Group is a leading global supplier of automotive exterior and structural components, focusing on electric vehicle battery boxes and expanding into humanoid robots and AI liquid cooling technologies to drive growth [2][3][4]. Group 1: Company Overview - Minth Group has established a comprehensive product system for automotive exterior and structural components, integrating four major product lines: metal trims, plastic parts, aluminum parts, and battery boxes [2][13]. - The company has a global workforce of 22,331 employees, with operations in 14 countries across three continents, and has built strong partnerships with numerous well-known automotive brands [13][21]. Group 2: Battery Box Business Development - The battery box is a critical component for electric vehicles, with the market size expected to grow significantly, reaching 31.8 billion yuan in 2024 and 78.2 billion yuan by 2030 in China [3][42]. - Minth's battery box revenue has surged from 0.96 billion yuan in 2020 to 5.34 billion yuan in 2024, with a corresponding revenue share increase from 0.77% to 23.06% [28][49]. - The company has established over 100 battery box projects with major global automakers, including partnerships with leading European brands [50]. Group 3: New Growth Areas - Minth is leveraging its automotive manufacturing expertise to enter the humanoid robot sector, focusing on integrated joint modules and smart components, and has formed strategic partnerships with key players in the field [4][63]. - The AI liquid cooling market is also being targeted, with Minth's existing technology and global production capacity positioning it well to meet the growing demand from AI server manufacturers [4][65]. Group 4: Financial Performance and Forecast - The company's net profit is projected to grow from 2.75 billion yuan in 2025 to 3.88 billion yuan in 2027, with earnings per share (EPS) expected to rise from 2.34 yuan to 3.29 yuan during the same period [5]. - Minth's profitability has improved, with battery box gross profit rising from 0.06 billion yuan in 2020 to 1.14 billion yuan in 2024, reflecting a gross margin increase from 4.29% to 21.43% [52].