Consumer Discretionary
Ownership has soared to record levels - a consistent unloved stock among Asia Ex-Japan investors between 2010 and 2020, the percentage of funds invested has risen from zero at the end of 2020 to just over 22% today. Over the last 6 months, the percentage of funds invested has risen by 5.8% and a further 9.3% of funds switched to overweight. This wasn’t part of an industry-wide move, with outflows seen in many of its competitors such as Nio, Maruti Suzuki and Hyundai Motor Co. Clearly, investors are growing in confidence that BYD can maintain its leading position in the EV market and further capitalise on the growing global trend towards sustainable transportation.
Edition: 161
- 26 May, 2023
Consumer Discretionary
Short attack by Grizzly Research - accuses NIO of likely using an unconsolidated related party to exaggerate revenue and profitability. Claims Wuhan Weineng helped NIO inflate revenue and net income by approx. 10% and 95% respectively in 9M2021, and FY2021 earnings beat by at least 60%. In this insight, LightStream's Shifara Samsudeen assesses the merits of the claims by Grizzly and finds most of the allegations difficult to refute. It appears that the main purpose of establishing a separate entity to carry out the BaaS operation was to keep the company’s large battery inventory off balance sheet as well as to inflate its earnings.
Edition: 139
- 08 July, 2022
The China Rotation: Allocations hit 4-year lows
Allocations in China & HK equities among active EM investors have plummeted 10%+ in the space of 18-months (India, Taiwan and Mexico have been the biggest beneficiaries) - on a sector level, China Industrials and Consumer Staples are the overweights, with managers rotating into Financials and away from Consumer Discretionary. On a stock level, Alibaba remains a core holding; out-of-benchmark AIA Group and Midea Group are popular, and for Value managers, China Mobile and CNOOC are key overweights. Active managers have stayed away from both NIO and Xiaomi, so pressure to invest on the grounds of benchmark tolerance should be disregarded.
Edition: 136
- 27 May, 2022
Asia’s Covid Woes & Global Supply Chain Implications
Autos / Industrials
More Asian countries are currently under some form of lockdown than at any point in the past year. This includes Taiwan, Thailand and Vietnam - all key source countries for global supply chains. SRR’s contacts in the Automotive and Automation industries now expect supply chain bottlenecks to persist for the remainder of the year with Logistics contacts expecting air and ocean freight to remain tight through to June 2022! SRR’s top picks for China exposure in H2 include Otis, ABB, Schneider Electric, Siemens, Yaskawa, Fanuc, Aptiv, Nio and Volkswagen.
Edition: 116
- 06 August, 2021
Tesla (TSLA)
Consumer Discretionary
TSLA China analysis: SRR’s latest checks suggest recent controversies are taking a toll with NIO, XPeng and Volkswagen the main beneficiaries. Feedback from dealers was consistent - there has been a clear increase in cancellations and a decline in foot traffic. Prospective buyers are adopting a ‘wait and see’ approach which increases the risk for a downside surprise in registrations over the coming months. Combined with a significant narrowing of lead times for the Model 3 (1-3 weeks from 2-7) and Model Y (1-3 weeks from 3-9) leaves SRR very bearish on near-term prospects.
Edition: 111
- 28 May, 2021
China Autos: Bullish NEVs
Consumer Discretionary
NEV market share continues to rise - SRR expect NEV sales to remain strong in 2021 (+40-60%), with the NEV penetration rate increasing by +150-250 bps, placing China ahead of its path to “20% by 2025”. Highlights Volkswagen as the next China EV play; well placed to gain market share due to its attractive pricing (avg. ~230K RMB) and impressive new launches. Among the domestic brands they prefer Nio and Xpeng over Li Auto.
Edition: 108
- 16 April, 2021