Industry Distribution Comparison

From their names, it can be observed that the CSI Auto Parts Theme Index focuses more on the components segment, while the CSI Smart Electric Vehicle Index broadly includes companies related to automotive intelligence and electrification.

Looking at the specific industry distribution, the CSI Auto Parts Theme Index concentrates on the upstream supply chain and does not cover vehicle manufacturing. Its top three weighted sectors are body accessories & trim, chassis & engine systems, and tires & wheels, accounting for 56% in total.

In contrast, the CSI Smart Electric Vehicle Index provides more comprehensive coverage of the automotive industry chain. In addition to components, it also includes battery and vehicle manufacturing. Lithium batteries, electric passenger vehicles, and battery chemicals are its top three weighted sectors, making up 49% in total.

Constituent Stock Comparison

In terms of the number of constituents and concentration, the CSI Auto Parts Theme Index includes 100 stocks, mostly small- and mid-cap component companies. The top 10 holdings account for about 42% of the index weight, with no single stock exceeding 10%.

The CSI Smart Electric Vehicle Index consists of 50 stocks, covering battery leaders such as CATL and EVE Energy, passenger vehicle leaders like BYD and Great Wall Motor, and software leader iFlytek. The top 10 holdings account for approximately 64% of the index weight, indicating higher concentration. Among them, CATL holds a 19% weight, while BYD accounts for 13%.

There are 9 overlapping stocks between the two indices. Among them, two component manufacturers—Sanhua Intelligent Control and Top Group—are included in the top 10 holdings of both indices. Additionally, three stocks in the CSI Smart Electric Vehicle Index are also among the top 10 holdings of the CSI Auto Parts Theme Index: Desay SV (software-related), Huayu Automotive Systems, and Xingyu Automotive Lighting (both related to body accessories & trim).

Broad Industry Development Prospects

The development of new energy vehicles (NEVs) is an essential path for China to transition from an automotive powerhouse to a leader in the automotive industry. In the future, as the NEV industry further integrates with transformative technologies such as energy storage, big data, cloud computing, and intelligent connectivity, the automotive sector is expected to embrace new growth opportunities. Consumer demand for NEVs in China will continue to rise.

According to China Merchants Securities, over the past three years, the net profit compound growth rate of the CSI Smart Electric Vehicle Index constituents reached 45%, while that of the CSI Auto Parts Theme Index was around 16%. In 2024, the CSI Auto Parts Theme Index is expected to deliver stronger performance, with constituent net profit growth potentially reaching 35%.

In terms of the three-year average return on equity (ROE), the CSI Auto Parts Theme Index stands at about 8%, while the CSI Smart Electric Vehicle Index constituents average around 16%. China Merchants Securities estimates that both indices will maintain positive growth of over 10% in 2024.

Investors should carefully assess their risk tolerance based on their investment objectives, time horizon, experience, and financial situation. Investment decisions should be made prudently after understanding the fundamental characteristics and valuation levels of the indices.