Electrification And Autonomous Tech Will Drive Global EV Expansion

Key Takeaways

• Rapid overseas expansion, diversified EV platforms, and accelerated sales channel rollout are driving strong global growth, margin expansion, and brand entrenchment.
  
• In-house technology, profitable EV components, and innovative smart systems provide sustainable competitive advantages and high-margin growth across both domestic and international markets.
  
• Aggressive expansion and heavy R&D investment boost growth but create lasting profit pressures, with future earnings vulnerable to policy shifts, price wars, and global trade headwinds.

Catalysts

Engages in the research and development, production, and sale of new energy vehicles in Mainland China and internationally.

• Analysts broadly agree overseas expansion, especially via Stellantis and rapid sales channel roll-out, will drive international revenues-yet this view underestimates the pace and magnitude; management's guidance now targets doubling overseas sales next year with local production ramping up in both Europe and Southeast Asia, setting up the company for exponential top-line growth and accelerated global brand entrenchment.
  
• Analyst consensus sees new model launches boosting sales, but recent signals are even more bullish: four differentiated EV platforms-A, B, C, and D-are rolling out in rapid succession, targeting both premium and mass-market segments, while new launches are consistently outselling expectations, strengthening pricing power and broadening Leapmotor's addressable market, which will strongly drive both revenue growth and margin expansion.
  
• Leapmotor's fast-growing, highly profitable Tier 1 EV components business is not fully reflected in current valuation-recent SOP wins with Chinese and international OEMs, and strong component sales momentum, will increasingly diversify revenue streams and drive high-margin earnings growth, leveraging the company's advanced in-house technology.
  
• The accelerating wave of EV adoption in emerging urban and middle-class markets, especially in China's lower-tier cities and in Asia, plays directly to Leapmotor's aggressive channel expansion and competitive product lineup, enabling disproportionate volume growth and significant operating leverage, with clear positive implications for long-term revenue and operating margins.
  
• Leapmotor's rapid advancements and in-house integration in intelligent driving, battery, and smart cockpit systems are not just reducing costs but rapidly shrinking product development cycles, positioning the company to out-innovate legacy automakers and competitors-this technological edge supports sustainable margin uplift and high-single to double-digit earnings growth as vehicle automation and feature-rich cockpits become mass-market expectations globally.

Zhejiang Leapmotor Technology Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Zhejiang Leapmotor Technology compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Zhejiang Leapmotor Technology's revenue will grow by 67.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -1.2% today to 5.0% in 3 years time.
• The bullish analysts expect earnings to reach CN¥11.2 billion (and earnings per share of CN¥8.41) by about August 2028, up from CN¥-576.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 18.9x on those 2028 earnings, up from -164.9x today. This future PE is lower than the current PE for the HK Auto industry at 21.3x.
• Analysts expect the number of shares outstanding to grow by 5.25% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.94%, as per the Simply Wall St company report.

Zhejiang Leapmotor Technology Future Earnings Per Share Growth

Risks

• Management repeatedly stated that profits in overseas markets are not an immediate priority, with margin gains being reinvested into brand-building rather than retained as profit, which could hold back growth in earnings per share from international expansion over the next several years.
  
• The company is aggressively pursuing rapid sales growth by launching new models and expanding coverage into lower-tier Chinese cities and new international markets, but this could expose Leapmotor to overcapacity risks and price wars, driving down both average selling prices and industry margins with negative effects on operating profit.
  
• Ongoing heavy investment in in-house R&D, smart driving, and digital sales infrastructure creates a long-term trend of rising absolute expenses; even though expense ratios may temporarily decline with sales growth, future expense pressure and the need for differentiation could challenge net margins as competition intensifies.
  
• Management expects sales of components and carbon credits to increasingly support revenues, but the reduction or withdrawal of foreign and domestic EV incentives as well as reliance on temporary carbon credit schemes could leave future topline growth vulnerable to policy changes, directly affecting revenues and gross margin.
  
• Although local production in overseas markets is expected to improve competitive position by mitigating tariffs, long-term secular risks such as rising global protectionism, potential trade barriers, and uncertain local market dynamics could stifle export growth and impair revenue visibility from international operations.

Valuation

• The assumed bullish price target for Zhejiang Leapmotor Technology is HK$100.08, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Zhejiang Leapmotor Technology's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of HK$100.08, and the most bearish reporting a price target of just HK$25.4.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be CN¥222.2 billion, earnings will come to CN¥11.2 billion, and it would be trading on a PE ratio of 18.9x, assuming you use a discount rate of 11.9%.
  
• Given the current share price of HK$73.5, the bullish analyst price target of HK$100.08 is 26.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.