What slowdown in China? Three Chinese companies are making a lot of money worldwide
More and more Chinese companies are becoming global players. BYD and other Chinese electric car brands flocked to a German auto show last week to announce plans for the European market. Auto exports remain a bright spot in China’s overall trade decline, customs data shows. Those overseas sales helped China’s auto sector’s profits rise 46% in the second quarter from a year earlier, Lei Meng, China equity strategist at UBS Securities, said in a note on Wednesday. Overall, BYD, state-owned SAIC and other Chinese companies captured 9% of the global electric car market in the second quarter, up from 5% in the second quarter, Counterpoint Research said. This is in addition to the companies’ share of the Chinese domestic market – the largest in the world for cars. CLSA raised its BYD price target by 10 Hong Kong dollars to HKD310 on September 4 – up 25% from BYD’s weekly close. Analyst Xiao Feng and a team expect BYD to join the ranks of the world’s ten largest original equipment manufacturers this year – before moving into the top five in 2026. Toyota ranks first globally, with 10.43 million units sold in 2022, the CLSA report said. Analysts expect BYD’s sales to rise 65% this year to 3.05 million units – including 250,000 to 300,000 exported vehicles. This is a step in Toyota’s footsteps. The Japanese automaker began increasing its exports abroad about 60 years ago and grew over the decades to surpass General Motors as the world’s largest automaker in 2008, according to Britannica. Today, the Japanese auto giant is struggling to maintain its strong presence in the pure electric car market. Beyond electric vehicles Slower growth in China has also prompted companies, including startups, to look abroad. In the second quarter, mainland Chinese stocks, so-called A shares, posted an 8% year-on-year decline in earnings, UBS’s Meng said. But, he said, “another sector that benefited from strong exports is engineering: year-on-year profit growth in the first half of 2012 turned positive, despite a year-on-year decline in the first quarter.” Shenzhen-listed construction equipment company XCMG said in In its filings in the last two weeks, its international sales rose 33.5% to 21 billion yuan ($2.86 billion) in the first half of the year. That accounted for 41% of total sales, up 11 percentage points from a year earlier, said the company, whose full name is Xuzhou Construction Machinery Group. Sales in West Asia, North Africa and Central America more than tripled in the first half of the year. Sales from Europe rose 150%, while sales in Central Asia and North America doubled, the company said. For the full year, XCMG is targeting 50% export sales growth, UBS equity analyst Phyllis Wang and a team said in a Sept. 4 note. Analysts raised their price target to 6.70 yuan from 6.20 yuan on higher earnings expectations, but maintained their neutral rating. That’s about where the stock closed on Friday. Chinese companies have been trying to “go global” for years, tacitly encouraged by Beijing. State-owned shipping giant Cosco has ships all over the world. Shanghai-listed Haier acquired GE’s appliance division in 2016. Mingyang, also listed in Shanghai, is a global leader in wind energy. In medical devices, China’s largest homegrown manufacturer Mindray ranks among the 50 largest in the world, JPMorgan analysts said, citing Omed and S&P Capital IQ. Mindray’s overseas sales were up 40% in the second quarter compared to a year earlier. increased significantly,” JPMorgan’s Helen Zhu and a team said in an Aug. 31 note. Sales in Europe rose 20% in the first half of the year compared to the previous year, it said. The company’s Shenzhen-traded shares have nearly 67% upside potential to JPMorgan’s price target of 433 yuan – even after analysts cut their growth expectations due to an ongoing crackdown on corruption in China’s healthcare sector. —CNBC’s Michael Bloom contributed to this report.
https://www.cnbc.com/2023/09/10/what-china-slowdown-three-chinese-companies-making-big-money-globally.html What slowdown in China? Three Chinese companies are making a lot of money worldwide
