At a time when global stock markets were being adjusted, the Hong Kong market showed high elasticity as an asset depression and ushered in a strong explosion, and the Hang Seng Index achieved “9 consecutive positives.” Increased market liquidity has also further amplified sentiment and stock price fluctuations. Zhixing Auto Technology (01274) experienced significant stock price adjustments in the process, which attracted widespread attention from the market and investors.

According to the Zhitong Finance App, the direct trigger for this stock price fluctuation is the inclusion of Zhixing Auto Technology in the short selling list, and the Hong Kong Stock Exchange will regularly adjust the short selling list to promote increased market liquidity and price discovery efficiency. Prior to that, the stock price of Zhixing Auto Technology had tripled compared to when it was listed.

Although Zhixing Auto Technology has now been included in the short selling list, its long-term value should still receive serious attention. An analysis of historical data from companies included in short selling shows that stocks newly included in the short selling list may experience price fluctuations in the early stages, but can often recover and grow later. This phenomenon shows that the market's reaction to short selling lists is often short-term and does not change the medium- to long-term value judgments of enterprises.

Zhixing Auto Technology is a leading provider of autonomous driving solutions in China. The management teams are all from international Tier 1 companies, and have leading technological innovation capabilities and large-scale commercialization capabilities. Currently, Zhixing Auto Technology has established cooperative relationships with many well-known automobile manufacturers including Geely, Great Wall, Chery, and Dongfeng. In recent years, mass production of the iDC and IFC series of high-margin products developed by the company has injected new vitality into the company's development. At the same time, the company has actively laid out overseas markets and passed GSR verification, laying a solid foundation for exports to more overseas markets. The company's excellent fundamentals have also attracted ratings from leading institutions such as Deutsche Bank and Citibank.

According to a Deutsche Bank research report, Zhixing Auto Technology's performance in 2023 is in line with the previous profit warning. Gross profit for the whole year increased 9% year-on-year, especially in terms of autonomous driving solutions and product business. Thanks to the company's enhanced economies of scale and improved bargaining power with suppliers, gross margin increased year-on-year. At the same time, Deutsche Bank believes that despite facing price pressure from OEMs, Zhixing Auto Technology has maintained a good level of gross margin through technological innovation and cost control.

Citibank pointed out in its latest follow-up report that it has observed the strong order trend of Zhixing Auto Technology, in particular the strong order volume of traditional partner Krypton and the increase in sales volume brought about by safety design awards, Citibank has further raised the company's performance forecast and raised the target price to HK$90.10. Citi anticipates that 2024 will be an inflection point for Zhixing Auto Technology to turn losses into profits, and is expected to achieve a net profit of 500 million yuan by 2026. Regarding sales forecasts, Citi raised the 2024/2025 sales forecast to 653,000 and 1.34 million units, which will reach 2.21 million units in 2026.

Judging from the general market environment, Zhixing Auto Technology is facing the blue ocean of rapid growth of new energy vehicles in China. In 2023, China's NEV production and sales volume reached 9.587 million units and 9.495 million units respectively, up 35.8% and 37.9% year on year, respectively, with a market share of 31.6%. Compared with this, passenger car production and sales in China increased by only 9.6% and 10.6% year on year in 2023

As a pioneer in the field of autonomous driving, Zhixing Auto Technology's growth and investment value from a long-term value perspective are self-evident. Looking forward to the future, with the continuous advancement of technology and the gradual maturity of the market, Zhixing Auto Technology is expected to become a key force driving the development of the smart car industry. For investors seeking to seize opportunities in the future automotive technology revolution, Zhixing Auto Technology is certainly an investment target worthy of long-term attention.