Auto Parts Stocks Decline Across the Board Amid Intensified Competition and Rising Raw Material Costs, Pressuring Q1 Profits

Stock News05-28 11:00

Auto parts stocks experienced a broad decline. At the time of writing, Nexteer Automotive (01316) fell 7.24% to HKD 4.87; Minth Group (00425) dropped 3.9% to HKD 37.9; Johnson Electric Holdings (00179) decreased 4.02% to HKD 34.86; and Zhejiang Shibao (01057) was down 2.41% to HKD 4.86. The pressure on profits for listed auto parts companies in the first quarter is a key factor. Analysis indicates that the rapid development of technologies such as smart driving, solid-state batteries, and other intelligent connectivity solutions is elevating industry standards while simultaneously intensifying market competition, thereby squeezing profit margins for auto parts firms. Furthermore, rising raw material prices have emerged as a significant factor impacting these companies' profitability. A UBS research report noted that Nexteer Automotive's management, speaking at the Asia Investment Conference 2026, disclosed the initiation of two steer-by-wire (SbW) projects so far this year. Management anticipates securing more SbW and electromechanical brake (EMB) orders in 2026, with a rear-wheel steering (RWS) project scheduled for production launch in the second half of this year. While management expects stable year-on-year revenue growth for the 2026 fiscal year, they cautioned that rising commodity prices could pressure profit growth, particularly in the Chinese market. The company is intensifying efforts in cost and capacity optimization to enhance profitability.

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Management anticipates securing more SbW and electromechanical brake (EMB) orders in 2026, with a rear-wheel steering (RWS) project scheduled for production launch in the second half of this year. While management expects stable year-on-year revenue growth for the 2026 fiscal year, they cautioned that rising commodity prices could pressure profit growth, particularly in the Chinese market. 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