In today’s top stories, China electric vehicle manufacturers release disappointing results. Meanwhile, analysts reveal their top alternative picks for the sector, while Citi claims Buffett-backed BYD could rise as much as 248% from current levels. The banks that financed Musk’s Twitter takeover accept that they will be holding $12.7bn of debt for a while, and DoorDash investors sell up.
China’s EV makers disappoint
Three of the big Chinese EV makers have reported attention-grabbing October delivery numbers as analysts have wondered whether Xi Jinping’s zero-Covid stance will have caused the sector to slam its brakes. LI Auto [LI] delivered 10,052 vehicles last month, up 31.4% from October 2021, Nio’s [NIO] deliveries soared by 174.3% to 10,059. While the two companies managed to shrug off the impact of plant closures, XPeng’s [XPEV] sales fell 50% over the same period to 5,101 vehicles.
Twitter takeover leaves banks holding $12.7bn
Elon Musk’s acquisition of Twitter is set to leave the banks that lent him $12.7bn to complete the deal holding the debt on their books until the early part of 2023 – the seven lenders include Barclays [BARC.L], Bank of America [BAC] and Morgan Stanley [MS]. The lenders are unlikely to sell the debt until Musk’s strategic plans for the social media platform – including cost reductions and a financial performance outlook – become clearer.
Food delivery growth slump
Investors in food delivery platform DoorDash [DASH] have been rushing for the exit ahead of the company’s Q3 earnings report on Thursday, with the share price currently sitting just above its all-time low set on 24 October. Fewer people are ordering takeaways as food prices skyrocket and “user growth continues to slow given the tough comps from 2021,” Aaron Kessler, an analyst at Raymond James, wrote in a note seen by MarketWatch.
BYD could rise 248%
Warren Buffett-backed BYD [1211.HK] reports its October delivery numbers later this week. Citi analyst Jeff Chung recently raised his price target of HK$640, an upside of 248.6% from the most recent closing price of HK$183.60. Chung said that the upside was “justified as we see BYD as a key winner from sector consolidation”. The company’s future earnings growth rate is comparable to those of Contemporary Amperex Technology [300750.SZ] and Tesla [TSLA], he added.
BT’s interim results to reflect inflationary pressures
The cost-of-living crisis will be in focus when BT [BT-A.L] reports its interim results for fiscal 2023 on Thursday. Many telecom providers are raising prices above the rate of inflation, which is boosting underlying revenue, but many households are struggling to pay their bills. The half-year numbers are likely to show how inflationary pressures have impacted BT’s operations and increased purchasing and maintenance and staff costs.
Top EV alternative picks
Tesla may be the bellwether of EV companies, but disappointing third-quarter delivery numbers and the Twitter takeover saga have weighed on the stock. Investors looking for exposure to the EV industry should consider the broader supply chain, including battery makers and lithium miners. Both Citi and HSBC have named Contemporary Amperex Technology and Albemarle [ALB] as top picks, with the former being a “battery leader” and the latter “the best positioned lithium producers” according to Citi analyst PJ Juvekar.
Aston Martin stuck in reverse
The Aston Martin [AML.L] has been in reverse this year, falling to an all-time low on 13 October. Investors will be hoping commentary provided with the Q3 earnings being released today can help the stock to accelerate. Losses are expected to narrow and the road to profitability won’t be straight-forward, but positive forward guidance as well as statements on the ongoing impacts of supply chain issues could drive the share price higher.