By Kate Yuan

(JW Insights) Jul 19 -- Many Chinese listed companies in the automotive industry chain have posted increased mid-year results, and the export business has become a new contributor to many of them, said a JW Insights report on July 18.

Over 1,600 A-share listed companies have disclosed their mid-year performance forecasts recently. Among them, the automotive parts industry enjoyed the highest number of companies with increased net profits in the first half of the year.

China produced and sold 13.248 million and 13.239 million automobiles in H1 of 2023, respectively, up 9.3% and 9.8% year on year. New energy vehicles (NEVs) maintained rapid growth, with the production and sales reaching 3.788 million and 3.747 million units, respectively, an increase of 42.4% and 44.1% over the previous year. NEVs take 28.3% of the market share, according to statistics from the China Association of Automobile Manufacturers (CAAM).

Most automotive parts manufacturers have benefited from the strong growth. The companies with the largest expected increase in profits in H1 include Sinotec (华培动力), Aeolus (风神股份), Viti Electronics (威帝股份), Joyson Electronics (均胜电子), and Feilong Auto Components (飞龙股份).

Sinotec leads the increase rate of the automotive industry chain, with a net profit of RMB56-62 million ($7.77-8.6 million) in H1 2023, surging 3,732% to 4,142%.

Joyson's net profit climbed by 552.38%, mainly driven by the strong growth of its automotive electronics business following the trend of intelligent electrification. Feilong, a new energy thermal management product provider, expects to make RMB130-150 million ($18.04-20.81 million) profit in H1, up 440.43%-523.57% from the last year.

Auto export has effectively promoted the overall growth of the industry. In the first half of this year, China exported 2.14 million vehicles, surging 75.7% year on year. Among them, 534,000 of them were NEVs, logging a 160% growth over the previous year. The market share of Chinese brand passenger cars remained stable at over 50%, according to CAAM.

Cui Dongshu, secretary-general of CPCA (China Passenger Car Association), said, "Automobile exports were good in H1, with excellent performance in Europe, America, and Southeast Asia. In July it will maintain the trend, with an overall growth rate of over 70%."

Many companies in the auto industry chain have benefited from the booming export business. Feilong's overseas revenue took up 53.47%, and it has won more than 30 overseas clients, including Cummins and BorgWarner, according to its 2022 annual report.

Tianrun Industrial (天润工业) had a net profit of RMB197-223 million ($27.3-30.9 million) in H1 with more expected export business.

The rapid growth of NEV export has also driven the growth of core components such as lithium batteries. The total export of lithium battery materials in China reached RMB342.65 billion ($47.5 billion) in 2022, up 86.7% from a year earlier, said the Ministry of Industry and Information Technology (MIIT).

Industry insiders believe that many Chinese auto part suppliers have grown into leaders in the segmented markets with global competitiveness. They are accelerating overseas expansion while deepening their presence in the domestic market. This, in turn, will bring new opportunities for China’s auto industry.