China Securities Co., Ltd.: Passenger vehicles gradually welcome a period of intensive new car releases, waiting for the terminal demand to recover.

China Securities Co., Ltd. released a research report stating that currently, February production and sales data for automobiles are being gradually released, and passenger cars are gradually entering a period of intensive new car releases. Heavy-duty trucks and buses are performing better than expected, with the commercial vehicle (especially export) market sentiment and performance expectations relatively favorable. The trading focus is on developments related to Tesla in the intelligent driving and Siasun Robot & Automation sectors, and catalysts are expected to intensify around March, including: FSD entering China comprehensively, Optimus V3 formal release, Cybercab mass production, etc. The main points of China Securities Co., Ltd. are as follows: Passenger Cars This week, Hongmeng Intelligent Mobility launched the restyled ZunJie S800 and WenJie M9, all upgraded with ADS 4.1 and 896-Line LiDAR, and the debut of ShangJie Z7 and Z7T; BYD Company Limited's technology launch introduced second-generation blade batteries and megawatt flash charging, with charging times of 5 minutes from 10%-70% at room temperature, 9 minutes from 10-97%, and 12 minutes from -20 degrees to 10-97%, with a total of 10 initial models, some of which have increased in pricing through technology upgrades. At the same time, comprehensive progress is being made in flash charging construction, with plans to build 20,000 flash charging stations by the end of 2026 and expand overseas. The current market may have already reached a trading sentiment of "weak expectations, weak reality," and future attention should focus on new car releases, improvements in terminal demand, changes in marginal narratives such as physical AI. The company believes that the industry sentiment in March is expected to gradually improve. Commercial Vehicles Since the beginning of the year, sales in the heavy-duty truck and bus industries have continued to be supported by strong export growth, and a strong performance in Q1 is expected. The two major sectors of heavy-duty trucks and buses in 2026 are expected to benefit from continued policy support for domestic demand and overseas expansion. It is recommended to focus on undervalued leading companies with strong performance. In terms of heavy-duty trucks, Weichai Power continues to be favored, as domestic manufacturers resume bidding while North America faces a shortage of power supply, boosting market expectations for increased production of Weichai's large-bore products and SOFC expansion. The company sees potential for performance realization and valuation improvement. In terms of buses, there is a focus on Yutong Bus Co., Ltd., and Xiamen King Long Motor Group, where export-driven momentum is clear in the medium term. Considering the certainty of performance growth (Yutong), the realization of the turnaround logic (King Long), and sufficient safety margins in valuation, it is advisable to pay attention to the current allocation window. Physical AI 2026 marks the year of commercialization of scale for driverless taxis and mass production for Siasun Robot & Automation humanoid robots, with Tesla's progress and supply chain being the market focus. In the short term, the Gen3 formal release is expected in Q1, followed by overseas capacity building and mass production in the second half of the year. In addition, the IPO application of Yushu may also be an important catalyst event. The company sees value in the configuration of three types of assets, including high-win rate Tesla chains, incremental links in the direction of technological iteration upgrades, and performance-improving undervalued companies with expected discrepancies; among others, firms such as Yushu have been performing well. Recommended Portfolio: Anhui Jianghuai Automobile Group Corp., Ltd., Weichai Power, Yutong Bus Co., Ltd., Xiamen King Long Motor Group, CAOCAO INC, Hengbo Holdings, Wuxi Longsheng Technology, Zhejiang Sling Intelligent Drive Group, Ningbo Tuopu Group. Risk Warning 1. Industry sentiment worse than expected; 2. Policy implementation effects worse than expected; 3. Export sales worse than expected; 4. Deterioration of industry competition landscape; 5. Expansion of customers and progress in new project mass production worse than expected.