Most Chinese automakers expected to post weak Q2 earnings, weak trend in auto stocks to continue – research

 

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Most Chinese automakers are expected to report weak earnings for the second quarter of the year, the weak trend in auto stocks is expected to continue, and investors will also their expectations for the results for the second half of the year, JPMorgan said in a note.

China’s July passenger car sales were in line with expectations, but continued to slow down month on month, with price cuts and rising inventories at auto dealers, however, auto exports remained strong and are expected to continue to be a strategic focus for China’s brands due to the room for growth and higher marginal profit, it said.

OEMs will continue to outperform the automotive industry in the long run with better earnings prospects, of which BYD Company being the top pick, it said. 

Xpeng Motors, which gained investment from Volkswagen, has improved its long-term fundamentals, but the recent uptrend may have already reflected most of the potential gains in the next few years, and investors need to wait for a more attractive buying opportunity, it said.