14 Nov 2024 23:04:40 ET │ 10 pages China Auto Manufacturers Expert Call Takeaways: Guangzhou Auto Show Preview CITI'S TAKE We hosted a call with industry expert Mr. Song Meng (independent auto journalist), who shared his sales expectation of various new models and outlook on auto stimulus. See below for our detailed takeaways. BYD Fangchengbao 8 — Mr. Song noted that BYD's Fangchengbao 8 (priced at Rmb379.8k–407.8k) takes a unique approach as a luxury SUV with off-road capabilities, positioned as a more rug ...

Summary of the Conference Call on China Auto Manufacturers Industry Overview - The conference call focused on the Chinese auto manufacturing industry, particularly electric vehicles (EVs) and new energy vehicles (NEVs) [11][28]. Key Points and Arguments 1. **Order Intake Trends**: - Overall order intake for the auto industry showed solid growth of 5-10% week-over-week from November 4th to 10th, 2024, indicating a positive trend in consumer demand [11][13]. - BYD's order intake for the same period was between 110,000 to 115,000 units, with a month-to-date total of 150,000 to 160,000 units, expected to exceed 500,000 units for November 2024 [13][17]. 2. **Production Capacity and Market Dynamics**: - Production capacity is anticipated to be a critical factor for order intake, especially for mainstream models priced below RMB 200,000, as consumers aim for delivery before the end of 2024 to benefit from old-for-new subsidies [11][13]. - The penetration of Advanced Driver Assistance Systems (ADAS) in the mainstream market is expected to influence purchasing decisions significantly in 2025 [11][28]. 3. **Individual Company Performance**: - **Li Auto**: November 2024 order intake was 19,000 units, with expectations to reach 60,000 units by the end of the month [13]. - **Nio**: October 2024 order intake was 18,000 to 19,000 units, affected by a RMB 10,000 incentive cut. Orders rebounded to 5,000 units in the first week of November [13][19]. - **Xpeng**: Last week's order intake was 45,000 units, with expectations to exceed 30,000 units in December 2024 [13][16]. - **Huawei Harmony**: Recorded 9,000 to 10,000 units in the last week, with the Luxeed R7 accumulating 30,000 orders, surpassing its production capacity [13][19]. - **Zeekr**: Last week's order intake was 5,500 units, with expectations to exceed 20,000 units in November and December [13][19]. - **Leapmotor**: Last week's order intake was 10,000 units, with expectations for both C10 and C16 models to achieve 10,000 monthly sales in December [13][18]. 4. **Market Competition and Pricing Strategies**: - A year-end price war is deemed unlikely due to a healthy order backlog across the sector, with OEMs focusing on timely deliveries rather than discounts [19][35]. - The average trade-in car prices are currently between RMB 170,000 to 180,000, potentially exceeding RMB 200,000 in top-tier cities [31]. 5. **Future Outlook**: - NEV penetration is projected to reach 65-70% by mid-2025, primarily at the expense of traditional luxury and joint venture brands that lack adequate NEV offerings [29][30]. - The expiration of local trade-in subsidies may lead to a seasonal dip in sales in January 2025, but a rebound is expected by the end of March due to new model launches [19][20]. Additional Important Insights - The shift of large dealership groups towards NEV brands indicates a growing concern about the future of internal combustion engine vehicles [29]. - Companies like Geely and Changan are adopting focused strategies to challenge BYD's dominance, particularly in the sub-RMB 200,000 segment [32][33]. - The competitive landscape is evolving, with brands like Li Auto needing to adapt to pressures from rivals while maintaining their market position [46]. This summary encapsulates the key insights from the conference call regarding the current state and future outlook of the Chinese auto manufacturing industry, particularly in the context of electric and new energy vehicles.

Summary of China Auto Manufacturers Conference Call Industry Overview - The report focuses on the **China Auto Manufacturers** industry, particularly the performance of **New Energy Vehicles (NEVs)** and traditional **Internal Combustion Engine (ICE)** vehicles during the period from October 28 to November 3, 2024 [1][10]. Key Findings 1. **NEV Retail Sales Penetration**: - Weekly NEV retail penetration stabilized at **53.7%**, an increase of **7.5 percentage points (ppt)** month-over-month (MoM), although it declined by **1.5 ppt** week-over-week (WoW) [1]. - This suggests that NEV penetration may exceed expectations in November [1]. 2. **BEV Recovery**: - Battery Electric Vehicles (BEVs) saw a rapid recovery in the first week of November with a **MoM increase of 80%**. Other categories included Extended Range Electric Vehicles (EREVs) at **54%**, Plug-in Hybrid Electric Vehicles (PHEVs) at **35%**, and ICE vehicles at **19%** [1]. 3. **PHEV Demand Momentum**: - Insights from discussions with manufacturers like BYD and Geely indicate that PHEV manufacturers are ramping up capacity in **4Q24**, with lower risks of demand being heavily front-loaded into **1Q25** [1]. - Potential extension of the old-for-new stimulus by the Chinese government could facilitate the conversion of locked-in PHEV orders into retail sales in **1Q25** [1]. 4. **ICE Inventory Levels**: - Higher inventory levels among ICE brands may lead to increased sales volatility towards year-end, potentially resulting in weaker demand in **1Q25** compared to NEV models [2]. Export Market Insights - Chinese brands held a **6.6%** market share in the passenger vehicle (PV) segment outside of China as of September 2024, reflecting a **2.6 ppt** year-over-year (YoY) increase [4]. - The report suggests that any potential US tariff policy could complicate the global auto supply chain, benefiting Chinese brands in markets like South America, the Middle East, ASEAN, and Oceania due to lower costs [4]. - Top picks in the sector include **BYD**, **Geely**, **Yutong**, and **Brilliance**, which is noted for its high yield and attractive risk-reward potential [4]. Market Share Trends - Japanese brands experienced declines in market share, with Toyota down **1.2 ppt** YoY to **7.0%**, Honda down **1.8 ppt** YoY to **3.8%**, and Nissan down **0.2 ppt** YoY to **2.8%** [4]. - German brands also saw declines, with Volkswagen down **1.1 ppt** YoY to **9.4%** and Audi down **0.3 ppt** YoY to **2.8%** [4]. - US brands faced similar declines, with SAIC GM down **1.8 ppt** YoY to **2.5%** and Changan Ford down **0.2 ppt** YoY to **0.5%** [4]. Additional Insights - The report emphasizes the importance of monitoring government policies and market dynamics that could impact the NEV and ICE segments in China and abroad [1][4]. - Analysts express a cautious optimism regarding the NEV market's growth trajectory, particularly in light of potential government incentives and the ongoing transition towards electric vehicles [1][4]. This summary encapsulates the critical insights from the conference call, highlighting the current state and future outlook of the China Auto Manufacturers industry.

Flash | 更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 04 Nov 2024 10:59:36 ET │ 11 pages Li Auto (LI.O) Li Auto incentives updates (Oct version) CITI'S TAKE By end-Oct, Li Auto narrowed its car purchase incentives across L-series while lifting total incentives for Mega. L6 end-Oct incentives were reduced by -11.3% (vs. early-Oct) to Rmb15.9k, with cash incentives down -16% to Rmb13.1k. L7/L8 saw total incentives cut -15% to Rmb12.4k by end-Oct, with cash incentives decreasing by -29.4% to Rmb9.6k. L9's cash incentives down ...

Summary of Joyson Electronic (600699.SS) 3Q24 Earnings Call Company Overview - **Company**: Joyson Electronic - **Ticker**: 600699.SS - **Industry**: Automotive components manufacturing - **Headquarters**: Ningbo, China - **Global Presence**: Over 100 bases in 30 countries with more than 80,000 employees [14][15] Key Financial Results - **3Q24 Revenue**: Rmb14,056 million, down 2% YoY but up 2% QoQ [1][10] - **Net Profit**: Rmb305 million, up 1% YoY but down 8% QoQ [1][10] - **EBIT Margin**: Expanded by 1.3 percentage points YoY to 3.6% [2][10] - **Gross Margin**: Increased by 0.8 percentage points YoY to 15.7% [10] Segment Performance - **Auto Electronics**: Revenue grew 3% YoY and 10% QoQ to Rmb4,566 million; gross margin narrowed to 18.9% [2][10] - **Auto Safety Products**: Revenue decreased 3% YoY but increased 2% QoQ to Rmb9,635 million; gross margin expanded to 14.1% [2][10] Order Book Insights - **Total New Orders**: Rmb20.0 billion in 3Q24, up 19% YoY but down 3% QoQ [3] - **Auto Safety Products Orders**: Rmb9.3 billion, down 31% YoY and 42% QoQ [3] - **Auto Electronics Orders**: Rmb10.8 billion, up 218% YoY and 130% QoQ [3] Earnings Projections - **Revised Earnings Estimates**: FY2024/25/26 earnings projections trimmed by 6% [4][11] - **Target Price**: Adjusted to Rmb18.5 from Rmb15.0, maintaining a Neutral rating [4][7][16] Market Position and Strategy - **Investment Strategy**: Positive outlook due to solid orders and revenue growth in auto electronics; however, the positives are largely priced in [15] - **Valuation**: Target price reflects a 15x 2025E P/E, indicating a recovery story amid a weak auto industry [16] Risks and Opportunities - **Downside Risks**: Include lower-than-expected global production growth, rising raw material prices, and poor sales growth in key markets [17] - **Upside Risks**: Better-than-expected auto demand, improved efficiencies, and faster adoption of autonomous vehicles [18] Financial Metrics Overview - **Market Cap**: Rmb23,680 million (approximately US$3,326 million) [7] - **Expected Share Price Return**: 10.1% with a dividend yield of 2.5% [7] - **Core EPS Growth**: Projected growth of 23.2% in 2024E, 30.4% in 2025E, and 20.6% in 2026E [11] Conclusion - Joyson Electronic's 3Q24 results reflect a mixed performance with challenges in the auto safety segment but growth in auto electronics. The company is navigating a tough market environment while maintaining a focus on strategic growth areas. The revised earnings projections and target price suggest cautious optimism moving forward.

Summary of Key Points from the Conference Call Industry and Company Involved - The focus is on the AI detection and application sector, particularly highlighting the developments from companies like Apple, Zhipu AI, and Samsung [1][2][4]. Core Insights and Arguments - **Investment Opportunities**: There are two main reasons to focus on AI detection and application investments: upcoming significant events in the industry, such as Apple's launch of Apple Intelligence and Zhipu AI's Auto GLM, and the continued importance of AA (AI Applications) in the A-share market [1][2]. - **Technological Advancements**: Zhipu Auto GLM is a smart assistant capable of performing various tasks like ordering food, booking tickets, and sending messages, showcasing the trend of increasing AI application penetration in mobile devices [1][3]. - **Market Dynamics**: The AI detection and application sector is characterized by technological upgrades, growing market demand, collaborative efforts among leading manufacturers, and significant investment potential due to previous stagnation in related stocks [1][4]. - **AI System Workflow**: The AI system operates in three main steps: digital goal setting and planning, reasoning using tools, and learning and reflection to improve performance [5]. Additional Important Content - **Limitations of Auto GLM**: The Auto GLM has several limitations, including imprecise output coordinates, limited multi-image processing capabilities, and sensitivity to environmental changes [8]. - **High-Resolution Image Processing**: The OGM (Auto GM) has advanced high-resolution image processing capabilities, which significantly enhance accuracy and reduce computational costs compared to traditional models [7]. - **Future Trends**: The future of AI detection and application is expected to see rapid growth driven by technological innovations and increased demand for productivity tools [4][20]. - **Investment Targets**: Investors are advised to consider companies related to Zhipu, such as Huace Film & TV and Dou Shen Education, as well as those in the entertainment and productivity tool sectors [19]. Conclusion - The AI detection and application sector is poised for significant growth, driven by technological advancements and strategic collaborations among leading companies. Investors should closely monitor developments in this space for potential opportunities.

Summary of Conference Call on AI Agent Company/Industry Involved - Focus on the AI Agent sector, particularly highlighting the recent developments from companies like Zhipu AI and major tech players such as Apple, Microsoft, and Samsung. Core Points and Arguments 1. **Investment Opportunity in AI Agents** - The current period is seen as a pivotal moment for investing in AI Agents and applications due to significant upcoming events, such as Apple's announcement of the Apple Intelligence feature set to launch on October 28, 2023 [2][4][32]. 2. **Launch of Zhipu AI's AutoGLM** - Zhipu AI introduced AutoGLM on October 25, 2023, which acts as a smart assistant capable of performing various tasks on mobile and PC platforms through voice commands [3][4][32]. 3. **Strategic Collaborations** - Zhipu AI has formed a strategic partnership with Samsung to co-create AI applications for mobile devices, marking a significant collaboration between leading AI model developers and top mobile manufacturers [3][4]. 4. **Recent Upgrades in AI Technology** - Notable advancements include Astrologic's Cloud 3.5 upgrade, enhancing programming capabilities and introducing new functionalities for computer interaction, and Microsoft's release of ten autonomous agents focused on productivity tools [4][5]. 5. **Market Dynamics and Trends** - The AI sector is currently viewed as one of the most critical areas in the A-share market, with a noted stagnation in AI model applications over the past year due to various factors, including slower-than-expected advancements in overseas models and a lack of breakthrough applications [4][5]. 6. **Potential for Rapid Adoption** - The collaboration between leading mobile manufacturers and AI model developers is expected to accelerate the adoption of AI applications in mobile devices, suggesting a potential shift in competitive dynamics within the industry [5][6]. 7. **Investment Recommendations** - Suggested investment targets include companies closely related to Zhipu AI, such as Huate Film and Dou Shen Education, which have strategic partnerships or investments in AI technologies [32][33]. 8. **Broader Applications of AI Agents** - AI Agents are anticipated to revolutionize productivity and user interaction, shifting from user-adaptive applications to applications that adapt to user needs, potentially expanding the user base in mobile internet [22][23]. Other Important but Possibly Overlooked Content 1. **Technical Insights on AutoGLM** - AutoGLM's architecture is designed to handle high-resolution inputs effectively, which is crucial for modern mobile devices, and it utilizes a dual-stream architecture for processing [11][15]. 2. **Challenges and Limitations** - Despite its capabilities, AutoGLM faces challenges such as inaccuracies in output coordinates and dependency on standard GUI elements, which may limit its effectiveness in certain scenarios [12][13]. 3. **Future of AI Agents** - The evolution of AI Agents is expected to lead to new interaction paradigms, where applications will increasingly cater to user demands autonomously, enhancing user experience and operational efficiency [22][23]. 4. **Emerging Trends in AI Applications** - The report highlights the potential for AI Agents in various sectors, including entertainment and productivity, indicating a broad scope for future applications and investments [32][33]. 5. **Market Sentiment and Stock Recommendations** - The sentiment around AI applications is expected to drive investment interest, particularly in sectors like gaming and emotional AI, which are seen as having significant growth potential [32][33]. This summary encapsulates the key insights and developments discussed during the conference call, emphasizing the strategic importance of AI Agents in the current market landscape.

Industry Investment Rating - The report does not explicitly provide an investment rating for the industry [1][2][3][4] Core Viewpoints - Audi is focusing on a progressive premium positioning, distinguishing itself from the luxury segment and reducing series complexity [9] - The company aims to re-establish its technological leadership with a clear path for product differentiation [10] - Audi is transitioning to a focused BEV (Battery Electric Vehicle) lineup, targeting premium market sweet spots and iconic models [11][12] - The new PPE (Premium Platform Electric) and PPC (Premium Platform Combustion) platforms enable major portfolio updates in both BEV and ICE (Internal Combustion Engine) vehicles [21][35][52] - Audi is leveraging partnerships in China to accelerate BEV and ICV (Intelligent Connected Vehicle) development, with production expected to start by the end of 2024 [16] - The company has implemented significant decisions since September 2023, including simplified product launches and a defined long-term target portfolio [19] Product Portfolio - Audi plans to have 9 core models in target segments, with strong coverage in the premium market sweet spot [12] - The Q6 e-tron on the PPE platform is the first step in a broader BEV model initiative [12] - Audi is transitioning from ICE to BEV with a new ICE generation, such as the A5 on the PPC platform, allowing flexibility based on market conditions [12] - The PPE platform offers significant improvements in electric drive unit performance, energy consumption, and cost reduction compared to the first-generation BEV [27][28] - The battery system in PPE models has higher efficiency and enhanced performance, with predictive conditioning and optimized battery management [29][30] - PPE models feature best-in-class charging capabilities, with up to 270 kW charging power and superior range [25][32][34] Technology and Innovation - The E3 1.2 electronic architecture enables future-proof functionality, including over-the-air updates and advanced driver assistance systems [36][39][42] - Audi is introducing next-generation AR (Augmented Reality) head-up displays, offering an increased field of view and improved imaging [44] - The AI-powered digital assistant integrates over 800 functions, including ChatGPT integration, enhancing the customer experience [45] - The PPE platform supports advanced safety and driving assistance features, such as adaptive cruise control, lane change assist, and proactive passenger protection [42] Market Strategy - Audi is targeting global customer segments with the Q6 e-tron and A6 e-tron families, with projected lifecycle sales volumes across Europe, Germany, the USA, Canada, and overseas markets [49] - The company is developing China-specific models with longer wheelbases, localized digital offerings, and design features, with production starting in Changchun by 2025 [50] - Audi is reducing complexity in its product offerings by transitioning from single options to focused option packages, improving customer convenience and production efficiency [70] Financial and Operational Efficiency - The PPC platform reduces platform costs by up to 60% through strict interlocking and synergetic development [55] - Audi is optimizing engine selection to cover customer needs with lower complexity, including PHEV (Plug-in Hybrid Electric Vehicle) models that will be introduced later in the product lifecycle [59][61] - The company is leveraging scale and flexibility in site allocation to achieve cost efficiencies and higher positioning in the market [71]