China's auto industry 2Q26 outlook: Profit revisions determine stock prices, optimistic about new energy leaders, downgrade SAIC GAC (J.P. Morgan)
J.P.
J.P. Morgan looks forward to the second-quarter earnings of Chinese auto companies, pointing out that earnings revisions are the most reliable predictor of stock prices. Domestic demand remains weak in the second half of the year, but overseas market growth is a structural trend. Car companies with new energy product competitiveness and overseas layout will benefit. The report adjusted the ratings, downgrading SAIC and GAC to cautious rating, and maintaining the positive rating ratings of Geely, NIO, BYD, etc. One-sentence conclusion: China's automobile industry is experiencing deep differentiation. Only those companies with new energy product competitiveness in the global market can survive the cycle and obtain valuation premiums. Positive/negative: Positive for BYD, Geely, NIO and other car companies with strong overseas business and new energy products. It is negative for joint venture brands such as SAIC and GAC and car companies that are slow to transform into new energy sources. The market has expected the differentiation of industry fundamentals, but tracking the trend of earnings revisions will be the key to determining short-term stock prices. Catalysts: 1) Second quarter financial reports and future profit guidance of various car companies; 2) Monthly export data and overseas market sales; 3) New model releases and technological (such as autonomous driving) progress in the second half of the year.