Zhongtai Securities has initiated coverage on CHERY AUTO (09973) with a "Buy" rating, highlighting the company’s strong export foothold and early-mover advantages. With orderly progress in domestic new energy branding and deepened collaboration with Huawei, the automaker is poised for volume and profit growth. Key insights from Zhongtai Securities include:

**Shifting Competitive Edge in Auto Manufacturing**: Post-intense competition between independent and joint-venture brands since 2021, market share gains now hinge on demand insight and electrification pace rather than traditional product cycles. Success requires redefining user needs beyond conventional "wheelbase-variety" frameworks and resonating with target demographics.

**Growth Retrospective**: Strategic exports and multi-brand expansion since 2017 drove market share gains. - *Early Phase (2008–2012)*: Reliance on domestic low-cost compact cars, limited by quality and brand premium. - *Transition (2013–2016)*: Voluntary quality upgrades and steady export growth. - *Recovery (2017–2021)*: Enhanced product strength, successful sub-brands (e.g., Jetour), and export momentum. - *Boom (2022–Present)*: Technological breakthroughs, accelerated NEV transition, and record sales, with exports leading among Chinese brands.

**Current Operations**: ICE vehicles anchor profitability while the Fengyun NEV series drives dual growth. - *ICE Models*: Arrizo and Tiggo series sustain strong sales. - *NEV Transition*: Fengyun series shows early success; Jetour and Zhijie (Huawei-backed) expand independently. - *Financials*: 2024 revenue surged 65.4% YoY to RMB269.9B, with net profit up 18.3% to RMB14.14B.

**Core Strengths**: 1. *Exports*: Dominance in Europe, Latin America, and Southeast Asia; overseas capacity ~1M units, with expansions in Turkey, Spain, and Thailand. 2. *Innovation*: Kunpeng engine leads globally with 48% thermal efficiency; production capacity to hit 1M units by 2026. Huawei’s ADS 4.0 elevates Zhijie’s smart capabilities.

**2025 Outlook**: - *Fengyun Series*: Targets mass market with CDM 6.0 hybrid tech; models like Fengyun A9 (15K price segment) and T11 (vs. Galaxy M9) aim to capture share. - *ICE Focus*: Domestic share rose 4.1ppt in 3 years, ranking second among independents. - *Exports*: Continued capacity expansion in key regions to bolster profits.

**Risks**: Sluggish macro recovery, intensified competition, slower EV adoption, and data inaccuracies.