In "The Big Banks," Citigroup expects that mainland China's automobile sales will remain sluggish in February, with overall industry performance weak in the first quarter

Citi Research report indicates that mainland China's January automobile sales data experienced an unprecedented decline, with the industry average dropping about 30% month-on-month, as consumers adopt a wait-and-see attitude due to reduced subsidies and discounts. Considering the timing of this year's Lunar New Year, the bank expects February sales to remain sluggish. However, it believes that after the Lunar New Year, automakers will launch a series of new models to attract consumers again, with BYD (01211.HK) particularly targeting new features that consumers are willing to pay for. The bank anticipates that the overall industry performance will be weak in the first quarter of this year, making April a better time to reassess the industry.

The bank stated that as the domestic market continues to adapt to recent changes, it expects BYD to face fluctuations during the product upgrade cycle in the first quarter. However, it remains confident in the company's ability to regain growth momentum. At the same time, the bank still believes that exports will be the main growth driver this year, helping to improve average selling prices and profit margins; companies with strong model plans in overseas markets, especially in Europe, are expected to have stronger earnings resilience.

The bank's top picks are BYD and Geely Auto (00175.HK), based on their export scale and higher per-vehicle profitability by 2026, with target prices of HKD 130 and HKD 23, respectively, both rated as "highly confident to outperform the market."