China Auto Supply Chain 3Q26 preview: Selective opportunities amid a weak auto market

Despite continued strength in Chinese PV exports and European EV sales, we expect 3Q26 earnings across China's auto supply chain to remain broadly soft, weighed down by weak domestic demand and elevated raw material costs. Nevertheless, divergent company fundamentals continue to present selective opportunities. We expect Kedali to lead revenue growth, with Yinlun and Sanhua also maintaining solid revenue momentum. Fuyao should remain relatively resilient despite the weak auto market, with limited exposure to raw material inflation supporting further margin expansion. On revenue, we expect Kedali to deliver c.45% YoY growth, Yinlun to rise 20%-25% YoY, Sanhua to rebound above 10% YoY, and Fuyao to achieve low single-digit YoY growth on a rising high value-added product mix and continued overseas share gains. On costs, Middle East tensions drove a rebound in metal and oil-linked input prices, leaving raw material prices materially higher YoY, though sequential pressure eased modestly;