JP Morgan believes that Geely Auto (00175) will continue its upward trend in profitability and expects improvement in the profitability of mainland Chinese car companies in the third quarter.

JPMorgan Chase released a research report stating that the third-quarter performance of mainland Chinese car companies is expected to roughly meet expectations, and their profitability is expected to improve compared to the second quarter. The bank believes that Geely Auto's profit uptrend will continue, benefiting from the launch of new models at higher prices, with room for profitability improvement, and has raised its forecasts for 2025 and 2026 by about 13%. The bank also believes that industry and stock performance will be affected by auto shows or overseas launches, such as the debut of LEAPMOTOR's first large 6-seat SUV in Paris on October 16, BYD Company Limited's new designs at the Tokyo and Guangzhou auto shows, and XPENG-W's detailed introduction of its humanoid Siasun Robot & Automation roadmap. In terms of policy, the bank believes that there is a 50% chance that national subsidies or other forms of stimulus measures will continue, and if so, they may be announced in January next year. The bank also expects domestic passenger car demand to remain flat or decline by 3 to 5%. Therefore, exports and increasing market share in the domestic market will be key for car companies.