4Q25业绩未达预期；Landian品牌车型组合将扩展至SUV以外；1Q26毛利率承压

4Q25 miss; expandmodel portfolio beyondSUVunder Landian; 1Q26 GPM pressure PO:108.00 HKD| Price:80.85 HKD 4Q25 OPEX ratio +2.4ppt QoQ; RMB1.3bn impairment lossSeres4Q25 revenue was RMB54.5bn, up 41% YoY/13% QoQ. 4Q25 GPM was 28.7%, flat YoY/down 1.2ppt QoQ, lower than BofAe at 30.3%, dragged by high salescontribution from AITO M7. Volume sales breakdown by model, M9/M8/M7/M5 reported25k/48k/74k/6k units in 4Q25. 4Q25 OPEX to sales ratio came in at 26.7%, up 3.9pptYoY/2.4ppt QoQ, on (1) higher R&D and admin expenses, due to recruitment of moretalents (R&D staff +45% YoY, senior management staff +24% YoY as of end-2025) andvehicle R&D for overseas market. Seres recorded RMB136mn investment income (likelyfrom 10% shareholding in Yinwang) in 4Q25. Seres booked RMB1.3bn asset impairmentloss mainly related to Landian. 4Q25 net income was RMB644mn, down 66% YoY/73%QoQ, missed BofAe by 78%. Net profit per vehicle (AITO brand) came in at RMB4k in4Q25, vs. RMB19k in 3Q25. Seres announced final DPS at RMB0.8. Adding back interimDPS, Seres’s dividend payout ratio for 2025 hit 32%. AITO M6decent order; overseas expansion; Landian model On23 March, AITO M6 started to take pre-sales orders, with pre-sales prices atRMB269.8-309.8k. AITO M6 received 60k+ units of refundable orders within 24 hours,with notable orders on BEV versions and from young generation. Seres starts overseasexpansion in 2026, with a focus on Middle East and Central Asia, while it targets anoverseas contribution of c.30% of total volume in the long run. Seres plans to expand itsmodel portfolio beyond SUVs under Landian–In Feb, Seres announced its plans to spinoff Landian and establish a new company in cooperation with Chongqing government. Lower 2026/27E EPS by 24%/19%; initiate Seres‑HSeres expects its 1Q26 GPM to be negativelyimpacted by raw material cost hikes. Seres guides its R&D spending in 2026 to remain at RMB10bn+level (RMB12.5bn in 2025),with 70% for vehicles and 30% for innovative businesses such as robotics. Factoring in4Q25 results, we lower 2026/27E EPS by 24%/19%. We initiate Seres‑H at Buy with a POof HKD108 (see details inside), based on average of DCF and P/E valuation. Our new Ashare PO of RMB122 (RMB145 previously) is based on a 25% A/H valuation premium overSeres-H. Despite 4Q25 miss, we reiterate our Buy on Seres for AITO's model portfolios. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules.Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. iQprofileSMSeres (H/A) Company Sector Autos/Car Manufacturers Company Description Founded in 1986, Seres Group (previously known asChongqing Sokon Industry Group Co., Ltd) is an automotivemanufacturer located in Chongqing, China. Seres's productsinclude PVs (AITO, Seres & Landian, Dongfeng Fengguang),CVs (Dongfeng Sokon, and Ruichi NEV) and autocomponents. AITO brand accounted for 92% of Seres'srevenue in 2025. Investment Rationale We have a Buy rating on Seres. We expect Seres' growth tobe helped by AITO brand. We believe AITObrand will standout as a premium EV brand, thanks to (1) strong brandequity - well known for ADAS, smart functions, safety,comfort and space, (2) robust model portfolios and newgeneration of M9, M8, M7, M5, (3) leading ADAS solutions. Exhibit1:Quarterly comparison4Q25 net income was RMB644mn, down 66% YoY/73% QoQ, missed BofAe by 78%. Exhibit3:Quarterly P&L summaryWe expect Seres’s net profit to be up by 11% YoY in 2026 Valuation Valuation: Seres-H We initiate Seres-H at Buy. We derive our PO of HKD108, based on the average of DCFvaluation method and P/E valuation method. We derive a fair value of HKD115 from our DCF calculation, with assumptions of 2% FCFperpetuity growth and WACC of 14.9%. We derive our P/E-based valuation of HKD101 by applying a target P/E of 24x to Seres's2026E EPS. Our target P/E multiple is based on the company's average PER in the pastone year at 24x. We now use 24x target P/E (historical average) to reflect that Seresenters into stabilized growth stage. Exhibit5:ValuationOur PO for Seres isHKD108 Valuation: Seres-A Our new PO of RMB122 for Seres-A is derived from applying 25% A/H premium(average A/H premium since the listing) to our Seres-H implied value. Price objective basis & risk Seres (XSGLF) We derive our PO of HKD108, based on the average of DCF valuation method and P/Evaluation method. We derive a fair value of HKD115 from our DCF calculation, with assumptions of 2% FCFperpetuity growth and WACC of 14.9%. We derive our P/E-based valuation of HKD101 by applying a target P/E of 24x to Seres's2026E EPS. Our target P/E multiple is based on the company's average PER in the pastone year at 24x. We believe the PER (price/earnings ratio) in the past one year betterreflects the company's latest growth outlook, given (1) Seres's major