CMSI: Consolidation Led by State-owned Carmakers to Help Cut Excess Capacity, Reduce Homogeneous Competition

CMSI reports that state-owned automakers GAC and FAW are leading asset restructuring to cut excess capacity, marking the start of auto industry supply-side reform. This consolidation aims to reduce homogeneous competition and boost sector valuations. The broker favors overseas expansion leaders like Geely, BYD, and Chery, along with parts makers Fuyao Glass and Weichai Power. Overweight ratings were maintained for several EV and robotics stocks, while Li Auto and Tesla remain under review.

CMSI released a research report stating that the National Development and Reform Commission has, for the first time, incorporated mergers and reorganizations and strict capacity control into its five-year plan. GAC GROUP (02238.HK) +0.160 (+7.033%) Short selling $1.27M; Ratio 2.004% and FAW have launched asset restructuring, marking the start of supply-side reform in the auto industry, which is expected to address the root causes of excessive competition and drive earnings and valuation recovery in the sector.

The broker believes that asset consolidation led by state-owned automakers will help reduce excess capacity and homogeneous competition. If implemented comprehensively, it will improve the overall profit margin of the industry and support sector valuation recovery. The broker maintained its outlook for next year's auto market of "stable domestic demand and stronger overseas expansion". For automakers, it favors the overseas expansion leaders GEELY AUTO (00175.HK) -0.140 (-0.869%) Short selling $56.52M; Ratio 21.467% , BYD COMPANY (01211.HK) +1.550 (+1.957%) Short selling $134.15M; Ratio 41.756% and CHERY AUTO (09973.HK) +0.160 (+0.636%) Short selling $1.43M; Ratio 7.133% . For auto parts makers, it favors FUYAO GLASS (03606.HK) +0.350 (+0.639%) Short selling $11.32M; Ratio 4.660% , WEICHAI POWER (02338.HK) +1.520 (+5.142%) Short selling $94.71M; Ratio 15.686% and MINTH GROUP (00425.HK) +0.020 (+0.084%) Short selling $4.28M; Ratio 10.065% . For the consolidation theme, it suggested watching potential trading opportunities in GAC GROUP (02238.HK) +0.160 (+7.033%) Short selling $1.27M; Ratio 2.004% and BAIC MOTOR (01958.HK) 0.000 (0.000%) Short selling $777.44K; Ratio 54.574% .

Stock | Investment Rating | TP

GEELY AUTO (00175.HK) -0.140 (-0.869%) Short selling $56.52M; Ratio 21.467% | Overweight | HKD34.2
BYD COMPANY (01211.HK) +1.550 (+1.957%) Short selling $134.15M; Ratio 41.756% | Overweight | HKD130
XPENG-W (09868.HK) +0.560 (+1.385%) Short selling $40.31M; Ratio 36.900% | Overweight | HKD92
UBTECH ROBOTICS (09880.HK) +1.550 (+2.003%) Short selling $48.94M; Ratio 27.436% | Overweight | HKD172
HORIZONROBOT-W (09660.HK) +0.060 (+1.481%) Short selling $53.57M; Ratio 46.797% | Overweight | HKD9
Hesai Group (HSAI.US) | Overweight | USD32
FUYAO GLASS (03606.HK) +0.350 (+0.639%) Short selling $11.32M; Ratio 4.660% | Overweight | HKD83
GWMOTOR (02333.HK) +0.045 (+0.612%) Short selling $7.74M; Ratio 18.720% | Overweight | HKD13
MINTH GROUP (00425.HK) +0.020 (+0.084%) Short selling $4.28M; Ratio 10.065% | Overweight | HKD56
LI AUTO-W (02015.HK) +0.020 (+0.043%) Short selling $178.52M; Ratio 46.921% | Neutral | Under Review
Tesla, Inc. (TSLA.US) | Neutral | Under Review
CHERY AUTO (09973.HK) +0.160 (+0.636%) Short selling $1.43M; Ratio 7.133% | Not Rated | -
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-09-17 12:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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