Investment Rating - The investment rating for the company is "Outperform the Market" [5][22]. Core Views - The company's lead-acid battery business remains stable, with a revenue of 191.5 billion yuan in H1 2025, down 5% year-on-year, and a gross margin of 15.97% [2]. - The lithium battery segment has shown rapid growth, achieving a revenue of 540 million yuan in H1 2025, up 193% year-on-year, with improved profitability [2]. - The company is accelerating technological iterations and diversifying its technology routes, including solid-state and sodium-ion batteries, with successful product developments and applications [3]. Financial Performance Summary - In H1 2025, the company reported a net profit of 869 million yuan, a decrease of 27% year-on-year, with total revenue of 20.917 billion yuan, down 3% year-on-year [1]. - For Q2 2025, the company achieved a revenue of 10.679 billion yuan, down 13% year-on-year but up 4% quarter-on-quarter, with a net profit of 448 million yuan, down 35% year-on-year but up 7% quarter-on-quarter [1]. - The company's gross margin for Q2 2025 was 15.14%, a decrease of 1.55 percentage points year-on-year, while the net margin was 4.32%, down 1.35 percentage points year-on-year [1]. Earnings Forecast and Financial Indicators - The company is expected to achieve net profits of 1.957 billion yuan, 2.304 billion yuan, and 2.602 billion yuan for the years 2025, 2026, and 2027, respectively, with year-on-year growth rates of 26%, 18%, and 13% [3][4]. - The earnings per share (EPS) are projected to be 2.01 yuan, 2.37 yuan, and 2.68 yuan for the years 2025, 2026, and 2027, respectively [4]. - The company's price-to-earnings (P/E) ratios are forecasted to be 15.0, 12.8, and 11.3 for the years 2025, 2026, and 2027, respectively [4].

Group 1: Overview of the Chengdu Auto Show - The Chengdu International Auto Show, held on August 29, is a significant event for the automotive industry, serving as a mid-year "health check" for the market and a platform for companies to present their strategies for the second half of the year [2] - This year's theme, "Leading the Trend, Moving Towards the New," features nearly 120 brands and covers an area of 220,000 square meters, highlighting the technological advancements and market transformations within the Chinese automotive industry [2] Group 2: Domestic Brands' Performance - Domestic brands showcased a strong presence, indicating their transition from followers to rule-makers in the industry, with Chery Group presenting five brands and BYD attracting significant attention with its innovative technology displays [3][4] - The exhibition strategies of car manufacturers have shifted from quantity to precision, focusing on regional consumer characteristics [3] Group 3: Technological Innovations - The integration of the HarmonyOS system into vehicles signifies a shift in competition from hardware to ecosystem building, with Great Wall Motors showcasing a wide range of products and technologies [4] - The introduction of sodium-ion batteries by CATL demonstrates China's leadership in core technologies for new energy vehicles, addressing low-temperature performance issues and reducing reliance on lithium resources [10][11] Group 4: Changes in High-End Market - The absence of traditional high-end brands like Porsche and Bentley at the show reflects a structural adjustment in the high-end car market, with traditional luxury car sales declining by 5%-7% and imported cars dropping by 32% [6] - The market share of joint venture brands has decreased to 29.9%, while domestic brands have increased their share to 68.6%, growing by 6.1% [7] Group 5: Future Trends and Market Dynamics - The Chengdu Auto Show serves as a catalyst for regional industrial upgrades, with the exhibition of new energy vehicles and smart technologies accelerating market recognition and consumer understanding [13] - The event highlights the dual interaction between domestic brands expanding internationally and foreign brands adapting locally, reshaping the global automotive industry landscape [12]

Core Insights - The 28th Chengdu International Auto Show, taking place from August 29 to September 7, is positioned as a key platform for the automotive industry in China, reflecting the ongoing transformation and challenges within the sector [2] - The theme "Leading the Trend, Moving Towards the New" emphasizes the integration of technology and market changes, showcasing nearly 120 brands across 220,000 square meters [2] Group 1: Domestic Brands - Domestic brands are transitioning from being followers to rule-makers, with companies like Chery and BYD showcasing strategic product placements tailored to regional consumer characteristics [3] - BYD's combination of "full matrix + technology zone" highlights the shift from static displays to interactive user experiences, indicating a new competitive dimension focused on ecosystem building [3] - The emergence of "ecological vehicle manufacturing" signifies a shift in competition from hardware to software and ecosystem integration [3] Group 2: International Brands - International brands are adopting a "dual-track strategy" to adapt to the local market, balancing electric vehicle investments with the legacy of fuel-powered vehicles [4] - The launch of localized products by brands like Buick and Ford illustrates the necessity of understanding and catering to Chinese consumer preferences [4] - The trend of "international genes + local modifications" is becoming essential for survival in the increasingly competitive Chinese market [4] Group 3: Technological Innovations - The auto show serves as a battleground for technological advancements, with companies like Xpeng and CATL presenting innovations that redefine the automotive landscape [5] - CATL's sodium-ion battery technology addresses low-temperature performance issues and reduces reliance on lithium resources, marking a significant step in battery technology [5] - The event highlights China's transition from a technology follower to a leader in core technologies within the new energy sector [5] Group 4: Consumer Experience and Policy Support - The auto show is evolving from a sales platform to a lifestyle event, integrating automotive culture with everyday consumer experiences [7] - Local government initiatives, such as purchase subsidies and streamlined services, reflect a long-term strategy to position the automotive industry as a driver of consumption upgrades [7] - The focus on emotional value in consumer behavior is reshaping automotive marketing strategies [7] Group 5: Regional Market Dynamics - Data from January to July shows a 10.1% increase in passenger car retail and a 57.1% rise in new energy exports, indicating a stable and quality-driven market transformation [8] - The Chengdu auto show is pivotal in activating regional consumption potential, with projected transaction volumes of 5.8 billion yuan and a 1:9 exhibition economy ratio [9] - The event serves as a catalyst for regional industrial upgrades, enhancing awareness of new energy vehicles and smart technologies in the western market [9] Group 6: Future Outlook - The 2025 Chengdu International Auto Show is set to redefine the automotive landscape in China, emphasizing systemic breakthroughs in technology and global market positioning [10] - The event symbolizes a declaration of China's new strength in the automotive industry, showcasing not just vehicles but a commitment to innovation and market leadership [12]

Group 1 - The core viewpoint is that automotive companies are shifting from a singular focus on electric or range-extended vehicles to a diversified technology approach, responding to market demands and entering a new development phase of "multi-coordination" [2][3] - Companies like Xpeng and GAC are entering the range-extended and hybrid markets, while Li Auto continues to push into the pure electric market with the upcoming launch of its second pure electric model, i8 [2][3] - The consensus in the industry is that the future will not be dominated by a single technology route; both pure electric and hybrid (including range-extended) vehicles will coexist, driven by technological evolution and market needs [3][4] Group 2 - NIO, which previously had no plans for hybrid products, is now set to launch its first range-extended hybrid model in 2026, targeting overseas markets like the Middle East and North Africa [4][5] - The decision to enter the range-extended market is influenced by local market conditions and infrastructure readiness, as highlighted by NIO's investor, CYVN Holdings [4] - The diversification of consumer needs is reinforcing a multi-faceted market landscape, where range-extended vehicles meet the demand for convenience and safety in regions with less developed electric vehicle infrastructure [4][5] Group 3 - The shift in technology routes by automotive companies is seen as a strategic progression rather than a passive response to market changes [5][6] - Li Auto's strategy of initially offering range-extended vehicles was to alleviate consumer range anxiety and gradually educate users about electric vehicle infrastructure [6][7] - The successful transition from range-extended to pure electric models is part of a planned strategy to align with user education and market readiness [6][7] Group 4 - Companies like Xpeng and Xiaomi are expanding from pure electric to range-extended/hybrid models, recognizing the maturity of these technologies and the diverse needs of consumers [7][8] - The choice to adopt range-extended technology is a proactive response to the challenges faced by larger vehicles in the pure electric segment, particularly regarding charging convenience for families [7][8] - The strategic decisions made by these companies reflect a balance between long-term technological direction and current market realities [7][8] Group 5 - The relationship between vehicle weight and range is a critical factor influencing technology route choices, with lighter vehicles benefiting from a positive cycle of reduced battery capacity and weight [8][9] - Larger vehicles often exceed a critical weight threshold, making it challenging to achieve a balance between range and performance in the pure electric segment, thus favoring range-extended or hybrid solutions [9][10] - The ongoing advancements in battery technology and vehicle lightweighting are pushing the critical point further, allowing for more effective use of pure electric technology in smaller vehicles [10]