BofAS Says Rising Costs to Squeeze Profit of CN Auto Sector, Cuts TPs for Carmakers
I'm LongbridgeAI, I can summarize articles.BofA Securities issued a report predicting rising raw material costs will squeeze profits in China's auto sector. While domestic sales remain weak, strong exports are expected to support results. Consequently, BofA cut target prices for multiple automakers and downgraded SERES to Underperform due to intensified competition and margin pressure. Sales forecasts were trimmed for major players like BYD and NIO, while Leapmotor and Chery saw upward revisions. Fuyao Glass received a Buy rating with an increased target price.
BofA Securities issued a research report expecting rising raw material costs to squeeze profit in China's auto sector. It noted that domestic sales were broadly meager in 1H26, while strong export growth will become a highlight of companies' results during the period. Based on changes in sales volume forecasts, earnings outlook and valuation benchmark rollovers, the broker substantially adjusted the target prices of multiple automakers, parts suppliers and dealers.
Among them, SERES (09927.HK) +1.260 (+2.861%) Short selling $1.36M; Ratio 1.628% was downgraded from Buy to Underperform, while the target price was sharply cut from HKD100 to HKD46, reflecting intensified competition for the M8/M9 models, leading to pressure on sales volume and gross margin, as well as weaker-than-expected earnings in 1H26 and reduced earnings visibility.
For automakers, owing to waning domestic demand, the broker trimmed its 2026 sales volume forecasts for BYD COMPANY (01211.HK) +0.250 (+0.268%) Short selling $241.73M; Ratio 32.560% , GEELY AUTO (00175.HK) +0.390 (+2.044%) Short selling $26.62M; Ratio 9.697% , NIO-SW (09866.HK) -0.080 (-0.211%) Short selling $21.59M; Ratio 28.742% , LI AUTO-W (02015.HK) 0.000 (0.000%) Short selling $26.85M; Ratio 12.920% , XPENG-W (09868.HK) +0.200 (+0.426%) Short selling $64.72M; Ratio 13.019% , SAIC MOTOR (600104.SH) -0.120 (-1.093%) , BAIC MOTOR (01958.HK) -0.015 (-1.734%) Short selling $111.09K; Ratio 31.542% , GAC GROUP (02238.HK) +0.030 (+1.322%) Short selling $658.43K; Ratio 10.661% , GWMOTOR (02333.HK) +0.165 (+1.873%) Short selling $7.76M; Ratio 19.627% , VOYAH AUTO (07489.HK) +0.085 (+3.030%) and SERES (09927.HK) +1.260 (+2.861%) Short selling $1.36M; Ratio 1.628% by 5.1%, 7.2%, 5.8%, 9.1%, 10.1%, 7.9%, 7.8%, 4.4%, 10.2%, 7.7% and 11.8%, respectively. It also raised this year's sales volume forecasts for LEAPMOTOR (09863.HK) -0.040 (-0.099%) Short selling $18.00M; Ratio 23.105% and CHERY AUTO (09973.HK) -0.100 (-0.375%) Short selling $528.24K; Ratio 2.693% by 2.8% respectively, optimistic about strong vehicle model cycles and export business growth.
Regarding parts suppliers, the broker believed most companies were affected by weakening demand in China, but overseas sales and market share gains could partially offset the pressure. It expected FUYAO GLASS (03606.HK) +0.300 (+0.520%) Short selling $13.92M; Ratio 14.657% to ride on higher ASP, market share gains and operating leverage, with 2Q gross margin likely remaining resilient. The broker gave it a Buy rating and raised its target price from HKD70 to HKD75.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-05 12:25.) (A Shares quote is delayed for at least 15 mins.)