Overview

UOB Kay Hian has identified five companies across China’s automobile and battery supply chain as its top investment picks for the second half of 2026. The selections – BYD Co Ltd, Contemporary Amperex Technology Co Ltd (CATL), Geely Automobile Holdings Ltd, Minth Group Ltd, and Ganfeng Lithium Co Ltd – were chosen based on margin outlooks and exposure to tightening raw‑material markets. The brokerage maintains a Market Weight rating on the overall sector.

Company‑specific theses

  • BYD – UOB argues that demand, rather than order backlog, limits BYD’s growth. Strong presales for several new models indicate demand outstripping the capacity of its second‑generation Blade Battery line, a bottleneck the broker expects to ease during the year. Overseas, BYD’s European expansion faces delays in Hungary and a paused project in Turkey due to labour, environmental and supply‑chain issues, prompting the firm to rely on exports to serve Europe in the near term. BYD reported a 5.5 % year‑over‑year increase in vehicle sales for June 2026, marking the second consecutive month of growth, and is pursuing acquisition of an existing factory in southern Europe for a second assembly plant on the continent.
  • CATL – The broker describes CATL as the most durable earner in the battery industry because of its scale and global reach. CATL’s energy‑storage order book is already stretched into 2028, indicating demand beyond the current EV cycle. Concerns that EV maker Aito may shift to rival suppliers CALB and Gotion are downplayed, as CATL’s broad customer base should offset any share loss. A new production line is expected to reach full output in August 2026, reinforcing CATL’s position as the clearest long‑term beneficiary of a recovering lithium value chain.
  • Geely – UOB’s thesis centres on group consolidation and brand‑building rather than pure sales volume. Chairman Li Shufu plans to streamline the wider Geely group around its Hong Kong‑listed flagship, a move expected to support margins. An export recovery is projected to lift growth in H2 2026. Geely’s involvement in motorsport – a dominant showing in TCR racing and a new World Superbike partnership with Zhang Xue – is presented as a strategic lever to promote a premium “China Star” export image. Geely Automobile reported a 2 % increase in total vehicle sales for June 2026, has purchased part of a Ford factory in Spain, and its driver‑assistance system received EU certification.
  • Minth – Placed within the auto‑parts segment, Minth is ranked above automakers but below battery and battery‑material producers. The brokerage’s broader sector view holds that regulatory intervention against irrational price competition among automakers should stabilise margins across the supply chain in H2 2026, a dynamic that benefits component makers such as Minth.
  • Ganfeng Lithium – Positioned as a pure upstream lithium producer, Ganfeng is seen as having the greatest leverage to benefit from a rebound in lithium carbonate prices. The broker links the price rebound to tightening supply‑demand dynamics, citing disruptions in China, Australia, Zimbabwe and Chile that are expected to sustain a deficit through 2026‑27 alongside rising demand from EVs, energy storage and AI. Progress on Ganfeng’s next‑generation large‑cell battery production line is cited as evidence of the company moving further into cell manufacturing beyond raw material extraction.

Sector outlook

UOB Kay Hian expects regulatory measures aimed at curbing price wars among Chinese car manufacturers to help stabilise profitability across the component sector in the second half of 2026. Tightening raw‑material markets, particularly lithium, are projected to support higher margins for battery and lithium producers.