Orient Securities·2025-06-22 13:46Investment Rating - The report maintains a neutral investment rating for the automotive and components industry in China [6]. Core Insights - The report highlights that the domestic luxury car market is still dominated by foreign brands, but is increasingly impacted by the rise of domestic high-end brands. The market share of domestic luxury brands is expected to gradually increase due to enhanced consumer confidence and recognition of domestic luxury brands [9][35]. - The profitability of luxury car manufacturers is higher and more stable compared to general car manufacturers, with brands like Ferrari showing significantly higher net profit margins [9][54]. - The report suggests focusing on domestic luxury car brands such as Jianghuai Automobile and BYD, which are expected to achieve breakthroughs in the high-end market [3][35]. Summary by Sections 1. Domestic Luxury Car Market Dynamics - The domestic luxury car market is primarily composed of foreign brands, with imported luxury car sales declining from approximately 810,300 units in 2020 to an estimated 589,500 units in 2024, representing a 15.6% year-on-year decrease [14][15]. - In 2023, the sales of high-end luxury models were about 531,800 units, accounting for approximately 2.4% of total passenger car sales, which is projected to drop to 1.9% in 2024 [9][15]. 2. Product Strength and Brand Value Enhancement - The report emphasizes that the improvement in product strength and brand value of domestic luxury brands will drive their upward brand positioning. This is supported by the increasing recognition of brands like BYD and Huawei in the luxury market [35][41]. - The integration of intelligent technology into luxury vehicles is becoming a key competitive advantage for domestic brands, allowing them to gradually catch up with traditional foreign luxury brands [37][40]. 3. Profitability Comparison - Luxury car manufacturers exhibit higher and more stable profitability compared to general car manufacturers. For instance, Ferrari's average net profit margin from 2020 to 2024 is projected to be 19.9%, significantly higher than that of other manufacturers [9][54]. - The report notes that while luxury brands maintain high profit margins, the increasing competition from domestic brands is expected to pressure the profitability of traditional luxury brands [59]. 4. Valuation Comparison - The report indicates that overseas ultra-luxury brands enjoy a valuation premium, with Ferrari maintaining a high price-to-earnings (P/E) ratio of 60-80 in 2024-2025, while other brands like Porsche and Mercedes-Benz have lower P/E ratios due to market pressures [9][54]. - If domestic luxury brands can establish stable sales and profitability, they may also achieve higher valuation levels compared to traditional manufacturers [9][54]. 5. Investment Strategies - The report recommends focusing on domestic luxury car brands that are expected to break into the high-end market, particularly highlighting Jianghuai Automobile and BYD as key players [3][35].