Tesla's 21Q3 performance hit a new high, the Ministry of Industry and Information Technology expects the supply of 21Q4 chips to improve.

21Q3 Tesla's income and profit hit a new high, and the gross profit margin of the automobile business continued to rise. According to Tesla's financial results for the third quarter of 2021, the total delivery volume of 21Q3 exceeded 240000 vehicles, of which the Shanghai superfactory 21Q3 produced 133000 vehicles and delivered 73000 vehicles to the Chinese market. 21Q3 Tesla achieved revenue of $13.76 billion, with year-on-year / month-on-month revenue of + 57% / month-on-month of 41%; operating profit margin of 14.6%; and net profit of $1.66 billion also reached a quarterly high of + 350% / month-on-month of + 350% and 41% respectively. The gross profit margin of 21Q3GAAP cars is 30.5% (28.8% after deducting points income). With the rapid increase in the scale of production and marketing and the continuous promotion of localization and cost reduction, Tesla continues to make breakthroughs in income volume and profitability, followed by the development of new business such as software charges and auto insurance finance. The profitability of bicycles may further exceed expectations in the future.

The Ministry of Industry and Information Technology expects that the automotive chip 21Q4 will be more relaxed than the 21Q3. A few days ago, the Ministry of Industry and Information Technology said that the automobile industry was obviously affected by the shortage of chips, mainly due to the 'mismatch' of the chip industry cycle, the impact of public health events, the fire in chip manufacturers and other multiple factors. But looking at all the signs, it is expected that the fourth quarter will be more relaxed than the third quarter. Combined with the current mainstream mainframe factory production scheduling situation in the fourth quarter, the month-on-month trend exceeds the previous year-on-month growth trend, and it is also expected that the chip shortage has been alleviated.

Investment advice: bullish 21Q4 passenger car sector, layout chip supply improvement and demand intensity confirmation of two waves of opportunities. The automotive sector has significantly outperformed the Shanghai Composite Index in October, reflecting a wave of supply improvement (October factory scheduling opportunities), followed by a second wave of demand intensity confirmation (October retail data confirmed in early November).

In addition, structural level, Tesla production, demand, sales are beyond the industry, while the 21Q4 European factory is expected to form a catalyst, it is recommended to overmatch Tesla industrial chain. Specifically, recommend 1) the independent rise of vehicle leaders, Great Wall Automobile, Geely Automobile (covered by the Hong Kong stock team), BYD, GAC GROUP; 2) parts that benefit from the general trend of electric intelligence. Fuyao Glass (sky trend, strip reversal), China Ding shares (air suspension trend, traditional business reversal); Bethel (IBS gradually realized, traditional business recovery), Baolong Technology (traditional business entered the recovery cycle, ADAS, and other new businesses gradually realized); 3) Silverwheel shares that benefited from Tesla's volume (new energy passenger cars entered the A-volume cycle), Top Group (benefiting from Tesla and the large cycle of North American electric cars, integrated supply trend in the smart era), precision forging technology (capacity cycle started, capacity release period).

Risk hint: passenger car recovery is not as expected; raw material prices fluctuate; automotive chips are in short supply again