The Economic Information Agency reported on the 8th that delivery data for new energy vehicles in mainland China for September have gradually been released, drawing market attention to the performance of the automotive sector amid intensifying industry competition. Lin Jiaheng, Executive Director and General Manager of Guonong Securities, analyzed that the current structure among automakers has not undergone a true reshuffling, with the disparity between leading and weaker companies still clearly evident. BYD (01211) and Geely (00175) continue to maintain their leading positions. He cautioned investors not to focus solely on individual metrics such as sales volume, but to comprehensively assess a company's profitability and per-vehicle profit margin. Lin gave an example: although certain state-owned enterprises such as SAIC have slightly surpassed BYD in year-to-date cumulative sales volume in the short term, when comparing financial data over the past few years, BYD's earnings per share have significantly surpassed SAIC's, indicating that only companies with solid profitability can safeguard shareholder interests and avoid financial crises during industry downturns.

Regarding the significant year-on-year decline in market capitalization of Hong Kong-listed automakers, Lin Jiaheng stated that under the ongoing environment of industry-wide "involution" and price wars, automakers without overseas operations or with extremely low export ratios are forced to continue ineffective competition within the domestic market, causing most new entrants and traditional automakers to fall into losses. In contrast, leading companies such as BYD and Geely Automobile have effectively mitigated the impact of domestic involution due to continuously rising export proportions. This strong export performance not only drove a rebound in third-quarter profitability, but also enabled their share prices to demonstrate the strongest resilience against declines amid sector-wide corrections.

Looking ahead to Q4 and positioning for earnings season, Lin Jiaheng advised investors to remain cautious when allocating automotive stocks, giving priority to leading companies with genuine profitability. He expects Geely's earnings this year could reach a record high, while BYD's full-year earnings will also remain at a very high level, with both companies expected to report third-quarter results better than the second quarter. New entrants and trailing automakers face higher investment risks due to persistent losses; therefore, Geely and BYD remain the most prudent choices in the current automotive sector with the greatest margin of safety and defensive strength. (al)