20250311-招银国际-零跑汽车-09863.HK-Competitive_pricing_for_B10_with_strong_4Q24_margins_5页_1mb

Leapmotor (9863 HK) Summary

Core Content and Main Points

Leapmotor, a Chinese new energy vehicle (NEV) manufacturer, has demonstrated strong performance and growth potential, leading to a BUY rating with an updated target price of HK$50.00, up from HK$40.00. The company's B10 EV model, launched on 10 March 2025, is priced competitively at RMB109,800–RMB139,800, with a model featuring LiDAR and city NOA priced at RMB129,800. This pricing strategy, combined with its in-house autonomous driving (AD) and chassis capabilities, has raised confidence in its sales performance.

The company's FY25E sales volume is revised upward by 7% to 0.48 million units, and it is projected to achieve a minimal net loss in FY25E, transitioning to a net profit of RMB1.26bn in FY26E as it continues to launch new models from the A and D series. Leapmotor's 4Q24 gross margin increased by 5.2 percentage points to 13.3%, exceeding expectations and showing strong cost control and economies of scale. The company's revenue in 4Q24 rose by 37% QoQ to RMB13.5bn, and its net profit reached RMB81mn, even stronger than prior forecasts.

The investor day on 11 March is expected to be a positive catalyst for the company's share price, as it will showcase key technologies and strengthen investor confidence.

Key Financial Forecasts

Leapmotor's revenue is forecasted to grow by 59% in FY25E and 13% in FY26E, with a P/S ratio of 1.0x in FY25E and 0.9x in FY26E, aligning with the average P/S of Chinese NEV start-ups. The P/E ratio for FY26E is forecasted at 45.4x, indicating a potential valuation based on future earnings.

Key Risks

• Lower sales volume or margins than expected
• Sector de-rating due to broader market conditions
• Overseas production delays and network expansion challenges may affect profitability

Shareholding and Performance

• Major shareholders include Mr. Jiangming Zhu (24.5%) and Stellantis N.V. (21.3%)
• Market capitalization is HK$55,484.1 million
• Share price performance over the past year has been positive, with a 12-month return of 80.4%, significantly outperforming the market
• 1-month return: 17.4%
• 3-month return: 43.1%
• 6-month return: 80.4%

Valuation Metrics

Earnings Revisions

Analysts and Reports

• The report is authored by Wenjing DOU, CFA and Ji SHI, CFA
• Related reports include:
  • "China Auto - 4Q24 earnings preview: Growing divergence" (20 Jan 2025)
  • "Leapmotor (9863 HK) - Clear brand positioning with unique overseas model; initiate with BUY" (8 Nov 2024)

Disclosures and Ratings

• CMBIGM provides research and forecasts based on analyst certification and disclosure of potential conflicts of interest
• CMBIGM Ratings:
  • BUY: Potential return of over 15% over the next 12 months
  • HOLD: Potential return of +15% to -10% over the next 12 months
  • SELL: Potential loss of over 10% over the next 12 months
  • NOT RATED: Not rated by CMBIGM
  • OUTPERFORM: Industry expected to outperform the market
  • MARKET-PERFORM: Industry expected to perform in line with the market
  • UNDERPERFORM: Industry expected to underperform the market

Company Overview

Leapmotor is a Chinese NEV manufacturer with a focus on competitive pricing, innovation in autonomous driving, and cost reduction. The company's aggressive pricing and in-house R&D capabilities are key drivers of its growth potential and sales confidence. Its 4Q24 performance indicates improving margins and strong revenue growth, with a net profit of RMB81mn, surpassing prior forecasts. The B10 model is expected to contribute significantly to the company's FY25E sales and profitability.

The investor day on 11 March is seen as a positive catalyst for the company's share price. The target price of HK$50.00 reflects the analyst's confidence in the company's future growth and cost efficiency.

Summary

Leapmotor is showing strong growth and improving margins, with a BUY rating and target price increase to HK$50.00. The B10 EV model is priced competitively, and the company's in-house R&D capabilities are underestimated by many investors. The 4Q24 results highlight improvements in gross margin and revenue growth, with sales volume forecasts being revised upwards. The company's financials and growth trajectory suggest continued expansion and profitability, although key risks remain, including market conditions and production challenges.