"Big Banks" JP Morgan downgraded Li Auto's rating to "Underweight," with Geely and SINOTRUK as top picks

JP Morgan published a research report, believing that the performance of the Chinese automotive market this year will show a mixed situation between 2018 and 2025: 1) Due to the overall passenger car market growth rate falling into negative territory (similar to 2018), the industry's performance for the year may be relatively weak; 2) However, driven by the release of new models, seasonal trend fluctuations, and changes in profit expectations (similar to 2025), market volatility throughout the year may intensify. Whether absolute or relative returns can be achieved ultimately depends on whether corporate profits can exceed expectations, which will be more challenging against the backdrop of rising costs.

Considering the above factors, the bank's preferred targets are Geely (00175.HK) and SINOTRUK (03808.HK); at the same time, the bank believes that BYD (01211.HK), Leapmotor (09863.HK), XPeng (09868.HK), and Nio (NIO.US) may present noteworthy layout opportunities in March or the second quarter of this year. Conversely, the bank downgraded Li Auto (02015.HK) to "reduce."

Morgan Stanley's investment ratings and target prices for automotive stocks are listed as follows:

Stock | Investment Rating | Target Price

BYD (01211.HK) | Overweight | HKD 150 → HKD 110

Great Wall Motors (02333.HK) | Neutral | HKD 17 → HKD 14

Geely (00175.HK) | Overweight | HKD 24 → HKD 22

Li Auto (02015.HK) | Neutral → Reduce | HKD 73 → HKD 56

Nio (NIO.US) | Overweight | USD 8 → USD 7

SINOTRUK (03808.HK) | Overweight | HKD 26 → HKD 45

XPeng (09868.HK) | Overweight | HKD 195 → HKD 135

Leapmotor (09863.HK) | Overweight | HKD 95 → HKD 56