The auto parts sector is anticipated to experience a noticeable weakening in Beta by 2026, driven primarily by structural opportunities that are expected to eclipse aggregate opportunities, according to a report from Dongwu Securities, as cited by the Zhitong Finance app. This shift is indicative of evolving dynamics in the industry, where innovation and technological advancements are reshaping the competitive landscape.
As automotive manufacturers increasingly integrate advanced technologies, the report highlights three key themes that will define the sector’s trajectory: “intelligent driving (L2++/L3/L4), liquid cooling (AIDC), and humanoid robots.” The emergence of humanoid robots is particularly significant, influencing valuation elasticity within the automotive parts market. The report underscores the importance of global expansion strategies as a long-term certainty for companies aiming to secure their positions in the global marketplace.
In its analysis, Dongwu Securities emphasizes the need for investors to focus on companies that demonstrate strong earnings realization and new order production. This approach is expected to yield selective investment opportunities within traditional sectors that are adapting to the changing demands of the marketplace.
From an earnings per share (EPS) perspective, the report urges investors to identify alpha-generating companies that can navigate market cycles successfully. Companies that prioritize product innovation, particularly those expanding into high-value sectors to enhance average selling prices (ASP) through organic growth or strategic acquisitions, are poised to gain market share. Notably, firms with established presences in Europe, North America, and Southeast Asia are projected to experience enhanced growth prospects and improved resilience against risk, particularly as profitability recovers and customer relationships strengthen. By 2026-2030, such companies are expected to emerge as Tier 1 or platform leaders globally.
The report names several companies to watch, including Fuyao Glass, Xingyu Corporation, Minth Group, Joyson Electronics, and Xingyuan Zhuomu. Investors are also advised to monitor Xinquan Corporation for potential growth opportunities.
In terms of price-to-earnings (PE) metrics, the report identifies intelligent driving technology as a focal point, particularly with the accelerated penetration of L2++ and the rapid rollout of regulations for L3 and L4 vehicles. Companies that excel in developing chips, domain controllers, core sensors, and drive-by-wire chassis technology are highlighted as key players. Recommendations include Horizon Robotics, Black Sesame Technologies, and Desay, while keeping an eye on Bortele and Nexteer.
The robotics sector is also transitioning significantly, moving from “0→1” to “1→10”, indicating increased demand for automotive components linked to large models and advanced actuators. Companies that can demonstrate technological synergy and manufacturing coordination are expected to thrive, with Tuopu Group, Joyson Electronics, and Shuanghuan Transmission standing out as leaders. Additionally, Yapp Corporation and Daimay Corporation are noted for their potential in this evolving landscape.
Liquid cooling technology is emerging as another critical area, with an anticipated market opportunity worth billions by 2030 as AI capital expenditures rise and AIDC power consumption increases. Companies specializing in thermal management, piping, and quick connectors are well-positioned to leverage these developments through system integration and cost-reduction strategies. Key recommendations include Minth Group, Yinlun Corporation, and Feilong Corporation.
Yet, the report does caution that emerging industries may not expand as rapidly as anticipated, with potential shortfalls in downstream demand and increasing geopolitical uncertainties posing additional risks. As these dynamics unfold, the automotive parts sector remains at a crossroads, where adaptability and innovation will likely determine long-term success.
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