Morgan Stanley maintained 'Overweight' ratings on three Chinese automobile stocks, citing scale advantages, product-cycle momentum and international growth potential despite a subdued domestic market.
The bank’s top selections included BYD and Geely, both recognized for their large-scale operations and overseas expansion strategies. Morgan Stanley also retained an 'Overweight' rating on SAIC, along with auto parts supplier Minth and EV brand Voyah.
BYD was singled out for its advanced overseas manufacturing footprint, with annualized overseas sales of approximately 1.67 million units. Local production covered about 51% of that volume, second only to Great Wall Motor among the six automakers analyzed. The Shenzhen-based automaker reported a 5.5% year-over-year increase in total vehicle sales for June, totaling 403,472 units, marking its second consecutive month of growth. Product launches scheduled for the third quarter include the Sealion 08, Great Han and Qin MAX, followed by the Qin PLUS, Tang and Fangchengbao Shark pickup in the fourth quarter.
Geely Automobile Holdings, also rated 'Overweight,' is preparing to introduce the Galaxy TT model as part of an atypical August-to-December launch cycle. The company’s first-half revenue fell short of expectations, though gross margin improved to 17.9% from 16.2% a year earlier.
SAIC, the third 'Overweight'-rated stock, relies more on direct exports than local overseas manufacturing, with roughly 385,000 units of overseas production capacity covering about 26% of its annualized 1.5 million units of overseas sales. Morgan Stanley expects second-quarter earnings to remain volatile but anticipates full-year 2026 results to benefit from gains on SAIC’s investment holdings during its transition. The company also announced plans to build its first car manufacturing facility in the European Union, located in Spain’s Galicia region.
