Eyes on new models, especially D19

Leapmotor (9863 HK) Eyes on new models, especiallyD19 Maintain BUY.We view Leapmotor’s 4Q25 earnings as largely in line andmanagement guidance upbeat.We believe the upcoming two D-series modelscould be key to its margins and valuation, although A-series may contributemore sales volume.We maintain our FY26E sales volume forecast of 0.9mnunits. We also expect revenue and profit from other automakers including R&Dsupport, CO2credits and component sales to beat market expectation. Target PriceHK$60.00(Previous TPHK$73.00)Up/Downside34.6%Current PriceHK$44.56 Wenjing DOU, CFA(852) 6939 4751douwenjing@cmbi.com.hk 4Q25 earnings largely in line.Leapmotor’s 4Q25 revenue rose 56% YoYto RMB21bn, 2% lower than our prior forecast.GPM in 4Q25 widened tothe historical high level of 15.1%, in line with our projection. Vehicle GPM ofabout 12% was slightly lower than our forecast. Selling expenses in 4Q25were higher than our estimates whereas G&A and R&D expenses werelower than expected, which led to an in-line R&D and SG&A combined ratio.Accordingly,net profitin 4Q25 reachedRMB355mn, in the positive territoryfor three quarters in a row, orRMB68mnlower than our prior forecast. Ji SHI, CFA(852) 3761 8728shiji@cmbi.com.hk Austin Liang(852) 3900 0856austinliang@cmbi.com.hk D-series couldbe key to FY26E margins and valuation.We maintain ourFY26E sales volume forecast of 0.9mn units, with theD19SUV andD99MPV combined contributing 0.1mn units.We are of the view that our salesvolume assumption for the D-series is crucial to our forecast ofvehicle GPMlift (FY25: 12.2%, FY26E: 12.7%) and 2% YoY growth in vehicle averageselling price in FY26E, despite industry headwinds with rising componentprices. D-series could also be crucial to Leapmotor’s valuation, in our view,as such success could convince investors that the automaker could goupscale and seize larger market share with wider price range. Stock Data Incomefrom other automakerscould behigherthanexpectation ofsome investors.We expect Leapmotor’srevenue from R&D support, CO2credits and sales of components to be RMB3.5bn with a blended GPM of70%, which is another reason for FY26E GPM lift and a significant portionof net profitin FY26E. We believe such income could even provide a positivesurprise in FY26-27E. We also expect the joint venture with Stellantis (STLAUS, NR) to contribute meaningful profit from FY27E, offsetting Leapmotor’slower GPM from overseas sales. Valuation/Key risks.We revise up our FY26E/27Enet profit forecastsby20%/2%to RMB3.6bn/4.6bn, respectively. We maintain our BUY rating butcut target price fromHK$73.00to HK$60.00, based on 21x our FY26E P/E.We change our valuation method from P/S to P/Egiven itspositive net profitoutlookfrom FY26E. We lower our multiples to reflect current marketsentiment. Our target price corresponds to 16x our FY27E P/E. Key risks toour rating and target price include lower sales/GPM than we expect, as wellas a sector de-rating. Source: FactSet RelatedReport“China Auto-Weak 4Q25 sales maylead to earning miss”-21Jan2026 “Leapmotor (9863 HK)-4Q25 NP to bemoreresilient; D19 key to FY26E”-18Nov2025 Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsiblefor the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates(as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve asan officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% overnext 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with therelevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months Address: 45/F, Champion Tower, 3 GardenRoad, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CM