9863: Electronics Self Reliance Will Support Competitive Edge Amid Cutthroat EV Landscape

Analysts have slightly lowered their price target on Zhejiang Leapmotor Technology to HK$69, trimming fair value by about HK$1.35 as they balance a modestly higher growth outlook against persistent competitive and policy risks in China’s electric vehicle market.

Analyst Commentary

Analyst opinion on Zhejiang Leapmotor Technology reflects a nuanced view of the company’s position within China’s intensely competitive electric vehicle landscape, balancing its growth prospects against structural risks in the domestic auto market.

Bullish analysts argue that, at the current valuation, investors are being compensated for these risks, particularly if the company can execute on its technology roadmap and scale efficiently.

Bullish Takeaways

• Bullish analysts highlight the company’s exposure to China’s rapidly expanding new energy vehicle segment, viewing sustained demand growth as a key driver supporting the HK$69 fair value.
• They point to the broader electronics and software capabilities across the Chinese ecosystem, suggesting that self reliance in key components can support margins and improve execution visibility over time.
• The favorable comparison with global peers in terms of vertical integration and technology stacking is seen as a potential source of multiple expansion if the company demonstrates consistent delivery against volume and product launch targets.
• Supportive sentiment toward leading ecosystem players in the sector reinforces the view that scale and data advantages can translate into higher long term earnings power than currently reflected in the stock.

Bearish Takeaways

• Bearish analysts remain wary of the cutthroat nature of China’s auto competition, noting that aggressive price wars can erode margins and limit upside to earnings estimates embedded in the HK$69 target.
• Policy risk is flagged as a central concern, with shifting subsidy frameworks and regulatory scrutiny adding uncertainty to longer term cash flow visibility and justifying a more conservative valuation multiple.
• There is caution that, despite ecosystem strengths, scale advantages may accrue disproportionately to a few flagship brands, leaving smaller or mid tier players more exposed to volatility in demand and pricing.
• Execution risk around rapid model refresh cycles and capital intensive expansion is viewed as a key swing factor that could pressure returns on invested capital if sales growth underperforms expectations.

What's in the News

• A scheduled special and extraordinary shareholders meeting on December 8, 2025, in Hangzhou will discuss key corporate matters, signaling potential governance or strategic updates (Key Developments).
• Proposed amendments to the Articles of Association will be voted on at the December 8, 2025 extraordinary general meeting, suggesting adjustments to corporate structure or shareholder rights (Key Developments).
• A board meeting was held on November 17, 2025 to approve and release third quarter 2025 results, providing updated visibility on recent operating and financial performance (Key Developments).

Valuation Changes

• Fair Value: Reduced slightly from HK$82.75 to HK$81.41, reflecting a modest downward revision in the base case.
• Discount Rate: Edged up marginally from 10.74% to 10.77%, implying a slightly higher perceived risk profile.
• Revenue Growth: Increased slightly from 37.35% to 37.53%, indicating a small upgrade to the medium term growth outlook.
• Net Profit Margin: Ticked up from 5.91% to 5.93%, signaling a minor improvement in expected profitability.
• Future P/E: Declined from 18.83x to 18.29x, suggesting a modest de-rating despite the slightly stronger growth and margin assumptions.