LEAPMOTOR's (09863) first-quarter performance largely met JPMorgan's expectations and exceeded market forecasts. Despite facing industry-wide softness, rising raw material costs, and intense competition during the quarter, the company demonstrated prudent cost control and delivered a record performance in overseas markets. Management expressed an optimistic outlook during the earnings call, reiterating the ambitious target of achieving one million vehicle sales by the 2026 fiscal year. JPMorgan maintains an Overweight rating on LEAPMOTOR with a target price of HK$90.

The bank noted that LEAPMOTOR's second-quarter sales guidance is set between 240,000 and 250,000 units, representing a sequential growth of approximately 120%, showcasing the strongest momentum among Chinese EV makers. This growth is primarily attributed to the order momentum for the A10 and B19 models, the upcoming launch of the D99 MPV, and refreshed versions of existing models. JPMorgan views this as an indication that the company is entering a robust product cycle and a significant growth inflection point.

Regarding overseas expansion, with a global sales network exceeding 1,000 outlets, management is confident in reaching the upper end of its 150,000-vehicle export target. The progress on acquiring Stellantis' (STLA) factory in Spain remains on track. JPMorgan maintains its sales forecast of 955,000 vehicles for 2026, representing a 60% year-over-year increase, and anticipates a return to profitability in the second quarter.

While raw material inflation remains a key variable for full-year margins, the bank maintains its net profit forecast for the 2026 fiscal year at RMB 2.6 billion, implying a 384% year-over-year increase.