Last Update 03 Dec 25

Fair value Decreased 1.63%

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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.

Expanding global presence and strategic partnerships, combined with localized production, are broadening market reach and diversifying revenue sources.
Emphasis on affordable, tech-driven vehicles and vertical integration is boosting margins, differentiation, and sustainable growth.
Heavy international expansion, rising competition, and reliance on subsidies and partnerships create significant risks for profitability, margin stability, and long-term cash flow sustainability.

Catalysts

About Zhejiang Leapmotor Technology

Engages in the research and development, production, and sale of new energy vehicles in Mainland China and internationally.What are the underlying business or industry changes driving this perspective?

Leapmotor is positioned to benefit from rapid expansion in global electric vehicle adoption, with strong execution in both domestic and overseas markets demonstrated by rapid sales growth (221,664 units in H1, ~156% YoY growth), ongoing model launches (B-/C-/D-series), and aggressive international ramp-up through local production in Malaysia and Europe; this supports rising revenue and a larger addressable market.
The company's focus on affordable, intelligently connected vehicles and continued R&D investment in proprietary smart driving systems (urban NOA, in-house AR-HUD, and full-stack autonomous solutions) enhances product differentiation, catering to growing consumer demand for high-tech mobility and supporting both top-line growth and margin expansion.
Scaling production, deeper vertical integration, and optimized cost management (now showing 14%+ GP margin, targeting 15%) are driving sustained improvements in gross profit margin and operational leverage, creating conditions for higher earnings and robust net margin recovery.
International expansion (leveraging Stellantis and FAW partnerships) in multiple regions with localized production and distribution (over 600 overseas outlets, production in Malaysia/Europe starting 2026, leadership in overseas start-up exports) increases volume potential and diversifies revenue streams, while regulatory tailwinds (carbon credits, EV incentives) drive additional non-auto and auto revenue.
Intensification of channel coverage (now in 286 Chinese cities, outlet operation efficiency up 27%) and successful entrance into less-penetrated urban and rural markets in China, paired with best-in-class service and fast product refresh cycle, support continued domestic growth momentum and customer retention, positively impacting revenue and future profit sustainability.

Zhejiang Leapmotor Technology Earnings and Revenue Growth

Zhejiang Leapmotor Technology Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Zhejiang Leapmotor Technology's revenue will grow by 33.6% annually over the next 3 years.
Analysts assume that profit margins will increase from -1.2% today to 6.0% in 3 years time.
Analysts expect earnings to reach CN¥6.8 billion (and earnings per share of CN¥4.87) by about September 2028, up from CN¥-576.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting CN¥8.6 billion in earnings, and the most bearish expecting CN¥3.1 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 24.3x on those 2028 earnings, up from -142.0x today. This future PE is greater than the current PE for the HK Auto industry at 20.2x.
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 11.95%, as per the Simply Wall St company report.

Zhejiang Leapmotor Technology Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Rapid international expansion-especially into Europe and Southeast Asia-is relying heavily on partnerships (e.g., Stellantis) and joint ventures, carrying execution risk and potential for lower net margins due to revenue-sharing and complex integration, which may impact long-term earnings and margin consistency.
The company's short
to medium-term strategy prioritizes aggressive sales growth and brand building over overseas profitability, with Leapmotor International reinvesting initial profit margins into marketing and expansion rather than sustaining earnings, raising the risk of delayed or unpredictable earnings improvement from non-China markets.
The competitive landscape in China's EV market is intensifying, with new, well-funded entrants (like Xiaomi and Li Auto) launching blockbuster models and ongoing price wars, risking margin compression and necessitating continual product innovation and pricing discipline to avoid revenue and gross margin erosion.
The company's recent improvements in GP margin and profitability benefited partially from ancillary sources like carbon credit trading and government subsidies, which may be subject to policy change or non-recurring effects, threatening the sustainability of earnings and stable cash flows in future periods.
As Leapmotor pushes into lower-tier Chinese cities and international markets, its reliance on offering high-spec, value-for-money vehicles will be challenged by possible input cost volatility (e.g., batteries, raw materials) and the rapid pace of technological change-potentially forcing higher R&D and CapEx just to maintain product competitiveness, thus impacting long-term free cash flow and return on investment.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of HK$78.0 for Zhejiang Leapmotor Technology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of HK$100.54, and the most bearish reporting a price target of just HK$25.52.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CN¥113.4 billion, earnings will come to CN¥6.8 billion, and it would be trading on a PE ratio of 24.3x, assuming you use a discount rate of 12.0%.
Given the current share price of HK$62.85, the analyst price target of HK$78.0 is 19.4% 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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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