Evaluating automotive stocks and observing the dynamics of the automotive market for a week.

In the past few years, with the rise of the new energy vehicle wave, a brand-new "wealth creation" myth has emerged in the capital market, but after the return of value sentiment, various A-share myths have gradually faded. When everything settled down, one stock gradually built up strength and silently took the lead in market capitalization among the new forces.

On June 20th, Seres' stock price closed at 101.19 yuan per share, with a total market capitalization of 152.775 billion yuan, surpassing the market capitalization of Ideal Auto's Hong Kong stocks, becoming the new energy vehicle company with the highest market capitalization.

From小康股份to Seres Group, this company has completed a historic transformation in the new energy era, and everyone credits Huawei for its success.

In 1986, the predecessor of Seres Automotive, "Chongqing Baxian Phoenix Electric Appliance Spring Factory," was established, starting its first entrepreneurial journey with parts, mainly producing motorcycle and automotive shock absorbers. Two decades later, after China entered the WTO, like Changcheng, Geely, and other companies, this company also began to expand its business into the field of vehicle manufacturing and cooperated with Dongfeng Group to establish "Dongfeng Yu'an Vehicle Co., Ltd."

It was until 2007 that Chongqing Xiaokang Automobile Group Co., Ltd. was formally established and renamed as Chongqing Xiaokang Industrial Group Co., Ltd. in 2011, which is the predecessor of Seres. At this time, Seres' main models were the well-known Dongfeng Xiaokang.

In the wave of new energy transformation, Xiaokang began to enter the new energy field, launching its own brand SERES, which stands for the Silk Road, and unveiled its first model SF5 at the CES in the United States, gradually transforming from a traditional automaker into a new force in the automotive industry.

In the fiercely competitive new energy market, like most new forces in the automotive industry, Seres did not carve out its own niche and even failed to shake off the shadow of Dongfeng Xiaokang. The outside world's attention still focused on doubts about whether micro-vans could also be transformed into new energy vehicles.

In 2019, Xiaokang and Huawei announced a partnership, causing a stir. Cooperating with Huawei and having Huawei fully lead the project, even the product directly entered Huawei's flagship supermarkets and appeared at Huawei's new product launch event, with Huawei's Yu Chengdong personally standing on the stage.

At that time, under the backdrop of the deepening of the decoupling of Sino-US trade, Huawei, as a sanctioned company, directly took on the banner of China's national industry. All stocks related to Huawei surged, and the A-share market even emerged with the concept of "Huawei." Huawei's entry into the automotive industry sparked widespread enthusiasm among investors, and this sentiment poured into Xiaokang's share price.

In 2020, as the outside world gradually clarified the cooperation relationship between Huawei and Seres and Huawei's important role in the partnership, Xiaokang's share price could no longer be suppressed. It rose continuously from around 7 yuan for a long time, doubling in just one month.

In April 2021, at the Shanghai Auto Show, Huawei introduced the first newly built model, the Wenjie M5, from both sides, officially embarking on a journey of takeoff. The continuous straight line once again created a myth in the history of A-shares. Xiaokang's stock price is almost a milestone breakthrough every day, reaching a peak of 48 yuan at the flagship stock price of the Shanghai Auto Show, and in the following two months, it climbed to an unprecedented high of 83.83 yuan.

This is not only the charm of new energy, but also the blessing of Huawei. Some people say that a moderately prosperous society is due to Huawei's cooperation, where they have given up their soul and lost themselves. But what is unimaginable to the outside world is that they not only have valuable opportunities to continue retaining the market, but also have gained much more valuable market value in the capital market than their souls.

On August 2, 2022, the company's name was changed from "Xiaokang Shares" to "Selis", officially waving goodbye to the past. To this day, there are still many friends who do not know that Sailis used to build Dongfeng Xiaokang, but now it has transformed into a large automotive group with five sub brands: Blue Electric, Dongfeng Xiaokang, Wenjie, Dongfeng Fengguang, and Ruichi.

That is to say, during this year, the investment sentiment from the outside world began to become rational, and the stock price of Selis has been sliding from its highest point of 90 yuan per share to 25 yuan per share in June 2023.

In the first half of 2022, Selis underwent research from at least 150 institutions, and Chairman Zhang Xinghai personally participated in many conference calls for institutional research. In July 2022, Selis launched a new round of private placements, in which 17 institutions assisted Selis with a blood transfusion of over 7 billion yuan at the issuance price of 51.98 yuan per share at that time. That month, the market value of Selis reached its peak of billions.

On June 28, 2022, the stock price of Celes reached a maximum of 90.5 yuan per share, with a market value of 135.479 billion yuan at that time. On June 20, 2023, the stock price of Celes fell to 25.36 yuan per share, a 70% drop from its highest price.

Correspondingly, new car making forces such as NIO, Xiaopeng, and Ideal have all entered a phase low point during this period. Although the decline of Celes is closely related to the overall market background, it is also closely linked to Huawei. In March 2023, Huawei founder Ren Zhengfei reiterated internally that "Huawei does not manufacture cars" within five years, does not allow the combination of Huawei brands and automotive trademarks, and prohibits the use of the "Huawei World" and "Huawei AITO" logos.

At that time, the sales of Selis also hit a low point, with a cumulative sales volume of 25761 units from January to June 2023. Compared to the same period last year, sales have decreased by 19.7%.

Until the Huawei autumn new product launch event in September 2023, Yu Chengdong made a comeback with the all-new Wenjie M7, while at that time, the tremendous potential of Huawei chips breaking through technological blockades, accompanied by national sentiment, once again surged towards Celes. The stock price of Salis rose directly from 35 yuan per share to 100 yuan per share.

Starting from this year, the sales of the Wenjie M9 have provided impetus for the increase in the market value of Celes. It is understood that since the beginning of this year, the indirect income of Wenjie M9 has brought about 45 billion yuan in revenue to Hongmeng Zhixing.

With the increase in delivery of the new M5 and M7 Ultra, as well as the launch of other new models such as the M8 in 2024. The sales competition between Wenjie and Ideal Automobile has entered a brand new stage.

It is worth noting that in the first quarter of this year, Selis' attributable net profit turned positive, with a year-on-year growth rate of 135.12%. Once seen by the outside world as selling cars at a loss, the Saili Si still endured hardships and tasted the sweetness.

After surpassing the ideal market value this time, what awaits Selis a test from the end market.