Ring Price Wave Raid, Fund Manager's Latest Interpretation, This Hot Track Beta Or Has Peaked

Buy in nobody, sell in the noise. Recently, the huge wave of auto companies' price reduction was transmitted to the stock market and caused A huge shock of auto stocks. On March 10, the auto stocks in the A and H share markets fell sharply, many shares fell more than 5% within the day.

However, if the time line is extended, despite the rebound at the beginning of the year, the overall trend of automobile stocks in the past half year has been a shock decline, auto ETF down more than 20%. Half a year ago, Buffett began to reduce the holdings of leading stocks, whether as the first domino, still remains to be discussed, but the current investment community for the new energy vehicle enterprise Beta market away seems to have reached a consensus.

The contradiction between production and marketing has triggered a wave of car price cuts

"In fact, the pressure is very big, the original player competition has been very fierce, and the new brand with the Internet gene continues to enter, who can come out is difficult to judge, profit growth can not long-term guarantee", last August, a fund manager in South China has expressed his concerns to reporters, he said in 2023 subsidies after the decline, car companies may fall into a price war.

In January of this year, tesla take the lead in the first shot fired electric price war, main models Model 3 (configuration) | inquiry and Model Y | inquiry (configuration) price fell to 22.99 and 259900 respectively, the highest drop of 48000. Subsequently, ask the world, Xiaopeng, zero run, LAN Map and other new forces have adjusted the price.

Recently, the highest subsidy of 90,000 Dongfeng Motor is set off a huge wave of price reduction, according to incomplete statistics, so far has included Mercedes Benz, BMW, Audi, Buick, BYD and other more than 30 car brands through the manufacturer subsidies or dealers to participate in the way of price reduction, among which the most obvious feature is fuel car brands.

Fan Ke, manager of Hongyi Auto Industry Upgrading Fund, believes that in the past three years, the sales volume of new energy vehicles in the domestic market has grown by leaps and leaps, while the total volume has not increased much. It has been the replacement of stock, and the pressure of joint venture fuel vehicle enterprises has been increasing. Since the second half of 2022, they have started to vigorously promote. In 2023, when Tesla started a price war, the pressure on fuel cars intensified. According to observation, fuel vehicles in January and February this year sales pressure is very big, down more than 30% year-on-year.

In addition, with the implementation of the passenger-vehicle emission 6B regulation in July 2023, the market is also concerned about a similar inventory clearance to the second quarter of 2020. However, Fanco believes that this is unlikely to happen. In the field of passenger vehicles, the cost difference between the complete national VI B standard and National VI A is not big. Most automobile enterprises choose to develop National VI B products in one step, so the actual impact is very limited.

But have to admit, "destocking" is placed in front of many auto companies the key issue. Not only fuel cars, but also new energy vehicles have emerged in excess. Scic UBS fund Shi Cheng believes that, basically most links on the industrial chain, are already more capacity than sales. The following may enter the time of price war, and the fierce competition of electric vehicles, power batteries and parts will accelerate the process of replacing fuel vehicles with new energy.

"Companies enter the territory of a brutal price war, which is disadvantageous for those companies that are not competitive enough, not profitable enough, not good enough technology, or not large enough scale." Xu Chengcheng, manager of Guotai China Securities New energy Automobile ETF fund, believes that in such a competitive environment, the higher the market share, the stronger the vertical integration ability of the automobile enterprise is actually dominant. For those who rely on suppliers, or rely on upstream components, the pressure is greater.

But everything has two sides. Xu further said that with the current weak sales forecast, the price cut can well stimulate consumption. At the same time, it can also encourage enterprises to further improve their product capabilities in order to gain more market share, such as using more technology, parts and products related to intelligent driving. After all, as a growth industry, more and more consumers will pay for cars as their products become stronger and stronger.

Valuations are high and then stuck in a correction

"Before, the market mainly because of intelligent, new energy expectations, gave a relatively high valuation of vehicle companies." In the view of the fund manager in South China, after the valuation of the vehicle enterprises that meet the above expectations is raised, the market divergence begins to increase, and the stock price is more likely to be aggravated by the disturbance of market news, which is one of the reasons for the sharp fluctuations of the stock prices of relevant car enterprises in the recent period.

In fact, the investment divergence for the auto companies began in the second half of last year, and one of the most notable events was Buffett's reduction of the leading shares. In June last year, the market value of BYD, the leading auto company with the highest expectation of intelligent and new energy and leading vehicle and battery business, once rushed to one trillion yuan. At that time, there were market voices that BYD's market value would continue to rush to 1.5 trillion yuan. But the billionaire investor, considered a bellwether in the investment world, began selling down BYD's Hong Kong shares after 14 years.

Back in 2008, Buffett's Berkshire Hathaway bought 225 million Hong Kong shares of BYD at HK $8 a share and held them for 14 years. In June 2022, BYD's Hong Kong shares rose to HK $333 a share, more than 40 times Buffett's purchase price. Two months later, in August 2022, Buffett began reducing his holdings for the first time. Berkshire's Hong Kong stake was about 130 million shares as of the Hong Kong stock exchange's latest disclosure on Feb. 9.

That is to say, in about half a year, Buffett's cumulative reduction of about 95 million shares, the number of positions has been reduced by more than 40%. And observe this half year BYD Hong Kong stock price trend, only in the beginning of this year appeared rebound, the overall still maintain shock down, March 10 down more than 8%, the latest closing of HK $201.2 / share, the historical high has been back nearly 40%.

It is also worth noting that in the A-share market, BYD fell out of the top 10 holdings of public funds in the fourth quarter of last year, although the number of shares held by public funds continued to rise. Wind data show that by the end of the fourth quarter of 2022, BYD was heavily held by 631 funds 132,024,500 shares, holding 11.33% of the outstanding shares, the fourth quarter was accumulated 716,800 shares.

New energy vehicle industry Beta or has peaked

Based on the present, the investment in new energy vehicles needs to be more careful. In the view of some fund managers, the new energy vehicle industry beta or has peaked.

"The penetration rate of new energy vehicles in China has reached 30 percent. What does that mean?" 'On the one hand, it's a recognition of the high growth of the industry in the past,' said a fund manager in Beijing. On the other hand, is the industry's future pressure will increase the prompt signal. The new energy vehicle industry has entered a competitive market. In this new market stage, the profit growth of leading companies will also be challenged with the increase of the total production of products and the decline of prices.

"New energy vehicles will be very prosperous in the future, but as in the past, explosive growth, all segments of the money should not have this state of large probability." Xu Chengcheng believes that there are two main lines of new energy vehicle investment, one is electric, the other is intelligent. Among them, in the electrification (or electrification rate increase) this track, the current pressure is still relatively large. Electrification is essentially a process of cost reduction and efficiency improvement, mainly in electric and battery cost reduction and efficiency improvement. Now, because of the relatively high price of raw materials, the profitability of relevant enterprises on the path of electrification is under great pressure. And on the intelligent track, Xu Chengcheng felt more growth. As the product gets better and better, and the experience for consumers and drivers gets better and better, more and more people will naturally choose such products.

Gan Chuanqi, director of growth and investment Department of China Finance Fund, also said that entering the era of new energy vehicles, electrification and intelligence are the two major trends of China's auto industry. Chinese brands not only have the first-mover advantage in electrification and intelligence, but also have the advantage of low cost and quick response. However, growth not only represents growth space and market prospects, but also means potential risks and more uncertainties. We need to pay attention to the growth with quality and barriers.