JP Morgan: Maintain Caution Towards China's Automotive Industry, Favor BYD COMPANY (01211) and GEELY AUTO (00175)

JPMorgan released a research report stating that BYD COMPANY (01211) exceeded expectations for its second-quarter performance, with a focus on its long-term strategic development. The bank maintains a cautious outlook on the overall Chinese automobile industry and is optimistic about car manufacturers with scale advantages, diversified products, and global layouts, favoring BYD Company Limited and GEELY AUTO (00175). From a strategic perspective, the bank prefers heavy trucks, such as Sinotruk Jinan Truck (03808), over passenger vehicles. JPMorgan expects that BYD Company Limited's average profitability per vehicle will remain robust in the second half of this year, with an expected profit of around 10,000 RMB per vehicle in the fourth quarter. With production capacity gradually increasing in regions such as Hungary, Indonesia, and Brazil, profitability per vehicle in overseas markets is expected to further exceed the current level of approximately 20,000 RMB. The bank maintains a "Overweight" rating on BYD Company Limited H-shares with a target price of HKD 124, and continues to assign an "Overweight" rating to BYD Company Limited (002594.SZ) A-shares with a target price of 124 RMB.