Shares in the automotive sector are broadly lower in Hong Kong trading. As of the time of writing, BAIC MOTOR (01958) fell 3.47% to HK$0.835, LI AUTO-W (02015) dropped 2.63% to HK$49.32, GWMOTOR (02333) declined 2.06% to HK$8.815, and XPENG-W (09868) slipped 1.74% to HK$46.42.
Data from the National Bureau of Statistics shows that in the first six months of the year, the automobile manufacturing industry recorded operating revenue of 5,189.32 billion yuan, a year-on-year increase of 1.8%. However, total profit was only 195.35 billion yuan, a year-on-year decrease of 19.5%, with the operating profit margin falling to 3.8%.
A research report from Bank of America Securities suggests that rising raw material costs are expected to pressure profit margins in China's auto sector. The report notes that domestic sales were generally weak in the first half, while strong export growth will be a key bright spot for company performance during the period. Based on changes in sales forecasts, shifts in earnings outlook, and rolling valuation benchmarks, the firm has significantly lowered target prices for several automakers, parts suppliers, and dealers.
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