Tianfeng Securities has issued a research report stating that based on WULING MOTORS' (00305) research capabilities in the new energy sector and continuous investment and innovation in building a comprehensive independent industrial chain, future performance is expected to continue growing. The firm forecasts that the company's total operating revenue for 2025-2027 will reach RMB 8.866 billion/9.724 billion/10.672 billion respectively, representing year-on-year growth of +12%/10%/10%. Based on the company's better-than-expected interim results, judging that the second half can maintain the first half's trend, the firm adjusts its 2025-2027 net profit attributable to shareholders forecast from RMB 80 million/110 million/144 million to RMB 87 million/110 million/144 million respectively, representing year-on-year growth of +72%/27%/31%. The target price is adjusted to HK$0.80, maintaining a "Buy" rating.

Tianfeng Securities' main viewpoints are as follows:

For the interim report ended June 30, 2025, the company achieved operating revenue of RMB 4.03 billion, up 2.0% year-on-year. Profitability significantly strengthened with net profit reaching RMB 85.809 million, up 306.2% year-on-year, and net profit attributable to shareholders of RMB 39.416 million, up 2,385.2% year-on-year. The firm believes the company's overall performance is impressive, with the improvement in profitability mainly benefiting from product structure optimization, effective cost control, and increased R&D investment. As product structure continues to optimize, the company is expected to achieve further performance improvements.

**Segment Business Performance: Core Business Solid, Powertrain Turns Profitable, Commercial Vehicles Drive Innovation**

Auto parts and other industrial services, as the company's core revenue source, achieved revenue of RMB 2.84 billion, up 5.2% year-on-year. This business steadily expanded markets, accumulating 125 project designations from 46 customers in the first half. While consolidating existing customers like SAIC-GM-Wuling and Great Wall Motors, it successfully developed new customers including SAIC Passenger Vehicle and Zhengzhou Yutong.

The automotive powertrain business achieved a major breakthrough, with adjusted EBIT turning from loss to profit, reaching RMB 6.61 million. This was mainly due to the company's improved product structure, with high value-added products like castings achieving rapid revenue growth.

The commercial vehicle business's adjusted EBIT increased 6.2% year-on-year to RMB 27.97 million. The company achieved good results in road vehicle segments including fire trucks and sales vehicles. Meanwhile, it actively deployed in the low-speed autonomous driving field, with the industry-first narrow-body high-load vehicle-grade wire-controlled chassis laying the foundation for future growth.

**Profitability and Cost Control: Gross Margin Improvement, Optimized Cost Structure**

In the first half of 2025, the company's gross margin improved to 12.0%, up 1.2 percentage points year-on-year, demonstrating enhanced product added value and cost control capabilities. Sales and administrative expense ratio decreased 1.3 percentage points year-on-year to 5.4%, reflecting improved operational efficiency. R&D expense ratio increased 1.3 percentage points year-on-year to 4.6%. The firm believes the company continues to increase investment in technology upgrades and new product development, injecting momentum for long-term development.

**New Energy and Intelligence: Associate Company Rapid Growth, Parent Company Clear Strategy**

Associate company "Lingshi Auto" brand performed excellently, with sales growing 9% year-on-year in the first half of 2025, establishing partnerships with leading companies like Huolala and SF Express, with continuously improving market recognition. Parent company Guangxi Automobile Group proposed the "Lingshi Project" strategy, committing to building the "Lingshi" vehicle brand and striving to become single champions in hybrid power systems, drive axles, and chassis, constructing an automotive industry ecosystem. Additionally, the company newly established a low-altitude economy business unit, actively deploying low-altitude and low-altitude travel related products.

Furthermore, SAIC-GM-Wuling, as the company's largest customer, comprehensively upgraded its strategic partnership with Huawei, deepening cooperation in assisted driving, intelligent cockpits, and intelligent manufacturing, providing support for the company's long-term business competitiveness.

**Risk Warnings:** 1. New energy vehicle market penetration rate below expectations; 2. Intensified competition in auto parts market; 3. Macroeconomic fluctuations affecting commercial vehicle demand; 4. Dependence risk on major customers.