[GF Automobile] How to View the Surge and Sustainability of Passenger Vehicle Stock Rallies

English summary

# Domestic demand bottoming out and rising + high-end overseas expansion starting + raw material price marginal benefits for downstream profits; we favor the 26H2 vehicle beta opportunity: 1. Domestic demand bottoming out and rising: Mid-to-long-term replacement demand can support a steady-state domestic demand of 21 million units. From a 26H2 perspective, considering subsidy quotas (26H1/H2 estimated to use RMB 60/90 billion), base effects, marginal oil price impacts, and increased EV supply, the YoY decline in passenger vehicle domestic demand will gradually narrow from July. 2. Exports continue to boom: 26H1 passenger vehicle/new energy exports +72/128% YoY, overseas market share of Chinese brands continues to rise + leading automakers' inventory-to-sales ratios are low (BYD/Geely overseas inventory-to-sales ratios are 1.5/1.2 months respectively), and the export boom is expected to continue. 3. Under high-end overseas expansion and localization, per-unit export profit is expected to rise steadily: Taking the European market as an example, the static market space for high-end SUVs is about 300,000 units. Chinese high-end PHEV brands (exemplified by Zeekr 9X) will achieve breakthroughs as 'leaders'.…