📰In news released overnight, it was reported by Wall Street Journal that Ford Motor and BYD are in discussions on a partnership in which Ford would import batteries from BYD to its factories outside the US, solving a key problem for Ford which needs a battery supplier as it ramps up its lineup of hybrids and pulls back from electric vehicles
🔼Nio Singapore shares are trading 1.7% higher this morning as of 925AM to USD 4.70 while trending Nio call warrant 9PGW (https://warrants.com.sg/tools/livematrix/9PGW) is up 5% to SGD 0.021.
🔊Bloomberg had reported overnight an upgraded recommendation (from Neutral to Outperform) on Nio shares from Macquarie given that fourth-quarter sales reached the high-end of guidance as strong ES8 and Firefly demand drove quarter-over-quarter growth. The analyst thus believe Nio is better positioned to weather the current headwinds in Chinese autos
Some of the known headwinds in the Chinese autos space include,
1⃣Volume headwind from softer policies: The EV registration tax incentive has been cut, and is now 5% up to Rmb15,000 (was 10% up to Rmb30,000) on top of revised vehicle replacement subsidies of 12% up to Rmb20,000 (versus fixed amount)
2⃣Input cost hikes squeezing original equipment manufacturer (OEM) margins: With lithium futures now near Rmb160,000/ton after a ~120% spike in prices over the past three months, OEM and battery maker margins will likely face a squeeze given the jump in costs
✅However, city-level trial L3 licenses have started with several OEMS including BYD, Geely, XPeng, and Li Auto. Clearer regulations will help drive the rollout of L3-capable cars, which should benefit electronics and component suppliers.
✅Finally, the EU's guidance to replace existing tariffs on Chinese EVs with a minimum pricing system, welcomed by China, will reduce policy uncertainty and can widen automaker margins. It will be especially beneficial to brands like BYD and Geely who export to EU
🐌 $GEELY AUTO(00175)$ and $NIO Inc. USD OV(NIO.SI)$ shares are having a slow start to the year, as they both trade -3.6% and -12.3% lower for the year respectively, while BYD is up 3.69% year to to date but still below the HKD 100 level as of yesterday's close
💲Amongst them, Geely has the steepest discount to peers given its forward price-earnings ratio of 9 times compared to Bloomberg's industry average of 25.5 times
🔧Investors keen to trade any short-term share price upside in any of the above names can consider the below trending call warrants. There are no put warrants available.
✳Trending BYD call $BYD MB eCW260602(VBFW.SI)$ : https://warrants.com.sg/tools/livematrix/VBFW
✳Trending Geely call $Geely MB eCW260703(MNHW.SI)$ : https://warrants.com.sg/tools/livematrix/MNHW
✳Trending Nio Singapore call $NIO MBeCW260520(9PGW.SI)$ : https://warrants.com.sg/tools/livematrix/9PGW
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