Citi Research: New Trade-in Subsidy Policy in China Could Speed Up Market Consolidation for Entry-Level Models; BYD and Others Hold Competitive Scale Advantages
Trade-in Subsidy Policy Update: China has updated its trade-in subsidy policy for passenger vehicles, maintaining the subsidy cap but changing the structure for 2026 to be a percentage of vehicle price rather than fixed amounts.
Market Consolidation Impact: The new subsidies are expected to accelerate market consolidation in the entry-level vehicle segment, particularly for models priced below RMB160,000.
Performance of Major Automakers: Major automakers like BYD, Geely, and GWMOTOR are positioned to benefit from scale advantages and cost control, contrasting with smaller competitors facing losses.
Commercial Vehicle Subsidies: Subsidies for commercial trucks and city buses remain unchanged, which is anticipated to benefit companies like YUTONG BUS and SINOTRUK.
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Zeekr 9X Exceeds 30,000 Deliveries as Production of Key Components Increases
Zeekr 9X Deliveries: Zeekr has announced that total deliveries of the Zeekr 9X have exceeded 30,000 units, driven by increasing customer enthusiasm since its launch.
Production Progress: The company has made significant progress in ramping up production for certain components, thanks to collaboration with supply chain partners.
Market Context: CLSA has predicted that overall auto sales in China will remain sluggish in February, indicating a weak performance for the industry in the first quarter.
Short Selling Data: As of February 4, 2026, short selling for GEELY AUTO stands at $101.29 million, with a ratio of 20.625%.
GEELY AUTO Acquires 67.43 Million Shares
Share Repurchase Announcement: GEELY AUTO announced a plan to repurchase shares worth up to HKD2.3 billion, having already repurchased 67.431 million shares under this initiative.
Share Cancellation: The repurchased shares will be canceled as soon as practicable following the buyback plan.
Ford Motor Allegedly Negotiating Production and Technology Collaboration with GEELY AUTO
Potential Partnership: Ford Motor and GEELY AUTO are in discussions for a partnership that would allow GEELY AUTO to utilize Ford's European factory space for vehicle production aimed at the European market.
Technology Sharing: The two companies are also exploring a framework for sharing automotive technologies, particularly in the area of autonomous driving.
<Research>CLSA Forecasts Continued Weakness in CN Auto Sales for February, Overall Industry Performance Lags in Q1
January Auto Sales Decline: China's auto sales experienced a significant drop of about 30% month-over-month in January, attributed to reduced subsidies and a cautious consumer approach.
February Sales Outlook: CLSA anticipates continued sluggish sales in February due to the Lunar New Year, but expects car manufacturers to launch new models to attract buyers post-holiday.
Top Picks for 2026: CLSA has identified BYD COMPANY and GEELY AUTO as top investment picks, citing their higher export capabilities and profitability per vehicle, with target prices set at HKD130 and HKD23, respectively.
Market Reassessment Timeline: The overall auto industry performance is expected to remain weak in the first quarter of 2026, with a potential reassessment of the market conditions suggested for April.
<Research>BOCI Anticipates Manageable Cost Pressures for GEELY AUTO (00175.HK), Lowers Target Price to $30, Maintains Buy Rating
Sales Performance: GEELY AUTO recorded approximately 270,200 wholesale units in January, marking a 1.3% year-over-year increase and a 14.1% quarter-over-quarter increase, driven by deferred wholesale volumes and strong export growth.
Profit Outlook: Despite expected revenue growth in 4Q25, profits may decline due to higher year-end expenses and potential recall provisions for early Zeeker models, with core net profit estimated between RMB3.5 billion and RMB3.8 billion.
Cost Management: BOCI anticipates manageable cost pressures for GEELY AUTO in 2026, with an annual cost reduction target exceeding 10%, which should help maintain vehicle profitability amid rising raw material costs.
Target Price Adjustment: Following the equity dilution from Zeekr's privatization, BOCI has lowered its target price for GEELY AUTO to $30 while maintaining a "Buy" rating, noting the current valuation is at a discount compared to peers.
HSI Rises by 220 Points; Gold, Silver, and Resource Stocks Recover; HSBC Holdings and NTES-S Surge
Market Opening Performance: The HSI opened 220 points higher at 26,995, with the HSCEI and HSTECH also showing gains of 0.6% and 0.7%, respectively.
Commodity and Mining Stocks: Mining stocks like CHINAGOLDINTL and ZIJIN MINING saw significant increases, with short selling ratios indicating active trading, while other commodities also trended upward.
Financial Sector Highlights: HSBC HOLDINGS rose 3% following positive forecasts from BNP Paribas, while AIA and HKEX experienced modest gains, reflecting a stable financial market.
Tech and Automotive Stocks: Mixed performance in tech stocks, with TENCENT declining slightly, while NTES-S and NEW ORIENTAL-S saw notable increases; automotive stocks like BYD and NIO faced declines amid high short selling ratios.
Zeekr 9X Exceeds 30,000 Deliveries as Production of Key Components Increases
Zeekr 9X Deliveries: Zeekr has announced that total deliveries of the Zeekr 9X have exceeded 30,000 units, driven by increasing customer enthusiasm since its launch.
Production Progress: The company has made significant progress in ramping up production for certain components, thanks to collaboration with supply chain partners.
Market Context: CLSA has predicted that overall auto sales in China will remain sluggish in February, indicating a weak performance for the industry in the first quarter.
Short Selling Data: As of February 4, 2026, short selling for GEELY AUTO stands at $101.29 million, with a ratio of 20.625%.
GEELY AUTO Acquires 67.43 Million Shares
Share Repurchase Announcement: GEELY AUTO announced a plan to repurchase shares worth up to HKD2.3 billion, having already repurchased 67.431 million shares under this initiative.
Share Cancellation: The repurchased shares will be canceled as soon as practicable following the buyback plan.
Ford Motor Allegedly Negotiating Production and Technology Collaboration with GEELY AUTO
Potential Partnership: Ford Motor and GEELY AUTO are in discussions for a partnership that would allow GEELY AUTO to utilize Ford's European factory space for vehicle production aimed at the European market.
Technology Sharing: The two companies are also exploring a framework for sharing automotive technologies, particularly in the area of autonomous driving.
<Research>CLSA Forecasts Continued Weakness in CN Auto Sales for February, Overall Industry Performance Lags in Q1
January Auto Sales Decline: China's auto sales experienced a significant drop of about 30% month-over-month in January, attributed to reduced subsidies and a cautious consumer approach.
February Sales Outlook: CLSA anticipates continued sluggish sales in February due to the Lunar New Year, but expects car manufacturers to launch new models to attract buyers post-holiday.
Top Picks for 2026: CLSA has identified BYD COMPANY and GEELY AUTO as top investment picks, citing their higher export capabilities and profitability per vehicle, with target prices set at HKD130 and HKD23, respectively.
Market Reassessment Timeline: The overall auto industry performance is expected to remain weak in the first quarter of 2026, with a potential reassessment of the market conditions suggested for April.
<Research>BOCI Anticipates Manageable Cost Pressures for GEELY AUTO (00175.HK), Lowers Target Price to $30, Maintains Buy Rating
Sales Performance: GEELY AUTO recorded approximately 270,200 wholesale units in January, marking a 1.3% year-over-year increase and a 14.1% quarter-over-quarter increase, driven by deferred wholesale volumes and strong export growth.
Profit Outlook: Despite expected revenue growth in 4Q25, profits may decline due to higher year-end expenses and potential recall provisions for early Zeeker models, with core net profit estimated between RMB3.5 billion and RMB3.8 billion.
Cost Management: BOCI anticipates manageable cost pressures for GEELY AUTO in 2026, with an annual cost reduction target exceeding 10%, which should help maintain vehicle profitability amid rising raw material costs.
Target Price Adjustment: Following the equity dilution from Zeekr's privatization, BOCI has lowered its target price for GEELY AUTO to $30 while maintaining a "Buy" rating, noting the current valuation is at a discount compared to peers.
HSI Rises by 220 Points; Gold, Silver, and Resource Stocks Recover; HSBC Holdings and NTES-S Surge
Market Opening Performance: The HSI opened 220 points higher at 26,995, with the HSCEI and HSTECH also showing gains of 0.6% and 0.7%, respectively.
Commodity and Mining Stocks: Mining stocks like CHINAGOLDINTL and ZIJIN MINING saw significant increases, with short selling ratios indicating active trading, while other commodities also trended upward.
Financial Sector Highlights: HSBC HOLDINGS rose 3% following positive forecasts from BNP Paribas, while AIA and HKEX experienced modest gains, reflecting a stable financial market.
Tech and Automotive Stocks: Mixed performance in tech stocks, with TENCENT declining slightly, while NTES-S and NEW ORIENTAL-S saw notable increases; automotive stocks like BYD and NIO faced declines amid high short selling ratios.
