Social security payments have been tightened, putting pressure on car dealers and labor-intensive parts suppliers to reprice hidden costs (Morgan Stanley)
A Morgan Stanley report pointed out that China's tightening of social security payment regulations will push up corporate labor costs, with car dealers and labor-intensive parts suppliers being the hardest hit.
A Morgan Stanley report pointed out that China's tightening of social security payment regulations will push up corporate labor costs, with car dealers and labor-intensive parts suppliers being the hardest hit. It will also erode residents' disposable income and weaken mass market car demand. This means that for the automotive industry chain that relies on cheap labor, its cost structure and profit forecasts face significant risks of downward revision. The policy has broad implications, and the market may not yet fully assess its true impact on corporate profits. The logic behind it is that social security compliance will cause "explicit costs" to replace "hidden costs", the "dividends" enjoyed by companies in the past will fade, and investors need to re-price. One-sentence conclusion: Strengthening social security payments is a systemic variable that affects the cost structure of the automobile industry chain. Dealers and labor-intensive suppliers are the first to bear the brunt, and their profit expectations are at risk of downward revisions. Positive/negative: negative for labor-intensive auto parts suppliers such as car dealers and wiring harnesses/interiors; relatively positive for areas with high automation such as chips and domain controllers. There is widespread discussion in the market about the impact of this policy, but the specific financial impact on individual stocks has not yet been fully Price In. Catalysts: 1) The specific intensity and scale of policy implementation in the Yangtze River Delta region (core area); 2) Changes in social security costs disclosed by relevant companies in their next financial reports.