Investment Rating - The report assigns a "Buy" rating for Chery Automobile (09973.HK) for the first time [1]. Core Insights - Chery Automobile is transitioning towards globalization and intelligence, with a focus on multiple brands to meet diverse market demands. The company has established a clear equity structure involving state-owned assets, strategic investors, and management, which enhances operational efficiency and strategic alignment [8][13]. - The financial outlook is positive, with significant revenue growth driven by the expansion of new energy vehicles and increasing overseas sales. The report forecasts a substantial increase in net profit from 11.95 billion yuan in 2023 to 25.38 billion yuan by 2027 [1][17]. - Chery's brand strategy includes five distinct brands: Chery, Jetour, Exeed, iCAR, and Zhijie, each targeting different market segments and customer needs [38][39]. Summary by Sections 1. Basic Information - Chery Automobile was founded in 1997 and has evolved from a local manufacturer to a global technology-driven automotive enterprise. The company has a clear equity structure that balances state ownership, strategic investments, and management control [13][14]. - The company has seen rapid revenue growth from 2022 to 2024, primarily due to the increasing contribution of new energy vehicles and sustained overseas revenue growth [17][18]. 2. Existing Brand System - Chery's main brand targets the mainstream market with a focus on high cost-performance and diverse powertrain options. Jetour emphasizes family travel and off-road capabilities, while Exeed targets high-end users. iCAR is aimed at younger consumers with a focus on personalization, and Zhijie leverages collaboration with Huawei for smart experiences [38][39]. 3. Export Strategy - Chery has a well-established export strategy that began in developing markets and is now expanding into key markets like Russia and Europe. The company has adapted its product offerings and distribution channels to suit local market conditions [55][60]. - The Tiggo series is central to Chery's product strategy, with a focus on multiple brands and energy types to cater to different regional markets [65]. 4. Technological Foundation - Chery is enhancing its platform-based manufacturing capabilities and pursuing a dual-track strategy of self-research and collaboration with leading technology partners. The company aims to consolidate its R&D efforts to improve efficiency and innovation [8][34]. 5. Profit Forecast and Investment Advice - The report projects Chery's net profit to reach 18.41 billion yuan in 2025, with a corresponding P/E ratio indicating a favorable valuation compared to peers. The strong momentum in new energy development and solid export positioning justify a higher valuation for the company [1][17].

Core Viewpoint - Chery Automobile, founded in 1997, has nearly 30 years of history and is entering a new era in 2025 with significant advancements in its electric vehicle (EV) and international business strategies [2][4]. Company Overview - Chery has a rich historical foundation, with rapid revenue growth and stable profitability in recent years. The company operates under five major brands: Chery, Jetour, iCAR, Exeed, and Zhijie, along with two overseas brands, Omoda and Jaecoo. It has extensive production capacity both domestically and internationally [3][50]. Development Stages - The company's development can be divided into five phases: 1. Layout and Investment Period (1997-2004) 2. Rapid Development Period (2005-2010) 3. Brand Accumulation Period (2011-2017) 4. Multi-Brand Restructuring Period (2018-2020) 5. Hybrid/Intelligent Transformation Period (2021-2024) [5][59]. Financial Performance - In the first three quarters of 2025, Chery achieved revenue of 214.83 billion yuan, a year-on-year increase of 17.94%, and a net profit of 14.365 billion yuan, up 28.19% [23][43]. - The company’s total sales volume reached 2.5157 million units in 2024, a 42.89% increase year-on-year, with overseas sales exceeding 1 million units for the first time [20][28]. Domestic Market Strategy - Chery's hybrid products are experiencing rapid growth, with a clear sub-brand strategy. The A9L model is expected to significantly boost the company's performance in the hybrid segment starting in the second half of 2025 [6][7]. - The company is focusing on enhancing the quality of its electric vehicle offerings, with a notable increase in the penetration rate of its hybrid products [7][32]. International Market Strategy - Chery has been expanding its international presence systematically, with plans for local production in multiple regions. By 2025, the company aims to deepen its overseas production capabilities, particularly in Southeast Asia and Europe [8][9]. - The company has transitioned from primarily exporting fuel vehicles to a comprehensive, ecosystem-based international strategy [9][56]. Brand Positioning - Chery's brand matrix includes: - **Chery**: Targeting family users with a focus on safety and quality. - **Jetour**: Catering to family travel and outdoor enthusiasts. - **Exeed**: Aiming at performance-oriented users. - **iCAR**: Targeting tech-savvy younger consumers. - **Zhijie**: Focusing on intelligent and high-performance vehicles [50][51][54]. Production Capacity - Chery has a robust domestic production capacity, primarily located in Wuhu, Anhui, with additional facilities in Henan, Liaoning, and Inner Mongolia. This allows the company to meet both domestic and international demand [56][57]. - The company is actively expanding its overseas production capabilities, with multiple production bases in Southeast Asia, Central Asia, South Asia, Europe, North Africa, and South America [56][57].

Investment Rating - The report assigns a "Buy" rating for Chery Automobile (09973.HK) for the first time [2]. Core Insights - Chery has demonstrated significant growth in both domestic and export markets, with a focus on electric and intelligent vehicle integration. The company has successfully transitioned from a low-cost strategy to enhancing product quality and brand value, leading to a substantial increase in market share [5][21]. - The financial forecasts indicate a strong revenue growth trajectory, with projected revenues of CNY 269.9 billion in 2024, representing a year-on-year increase of 65.4%, and a net profit of CNY 14.1 billion, up 18.3% year-on-year [5][32]. Summary by Sections Company Overview - Chery's total share capital is approximately 5.81 billion shares, with a market capitalization of around HKD 175.77 billion as of November 25, 2025 [2]. Financial Performance - Revenue projections for Chery are as follows: - 2023: CNY 163.2 billion - 2024: CNY 269.9 billion (up 65%) - 2025: CNY 289.7 billion (up 7%) - 2026: CNY 325.1 billion (up 12%) - 2027: CNY 359.1 billion (up 10%) [2][78]. - Net profit forecasts are: - 2023: CNY 11.95 billion - 2024: CNY 14.1 billion (up 18%) - 2025: CNY 17.3 billion (up 23%) - 2026: CNY 21.9 billion (up 26%) - 2027: CNY 24.3 billion (up 11%) [2][78]. Market Position and Strategy - Chery has established itself as a leader in exports, with a focus on enhancing its product lineup and expanding into new markets, particularly in Europe, Latin America, and Southeast Asia. The company has also made significant advancements in engine technology, with the new Kunpeng engine achieving a thermal efficiency of 48%, the highest globally [5][44][68]. - The company is integrating its various brands, including the high-end brand Starway and the electric brand Windcloud, to streamline operations and enhance market competitiveness [5][50]. Future Outlook - The report anticipates continued growth in Chery's market share, particularly in the fuel vehicle segment, with a projected increase in sales driven by the successful launch of new models and ongoing improvements in engine technology [5][62]. - The company is expected to maintain a strong focus on electric vehicle development, with the Windcloud brand positioned to capture market share in the competitive landscape [5][52]. Valuation and Investment Recommendation - The projected price-to-earnings (P/E) ratios for Chery from 2025 to 2027 are 9.2X, 7.3X, and 6.6X, respectively, which are below the industry average, reinforcing the "Buy" rating [2][82].

Core Viewpoint - Chery Automobile has launched the high-performance fuel sedan, Arrizo 8 PRO 2.0T, priced between 137,900 and 149,900 yuan, marking a strategic shift towards performance vehicles amidst the growing dominance of electric vehicles in the market [2][4]. Group 1: Product Launch and Features - The Arrizo 8 PRO 2.0T showcases high performance with a maximum power of 187 kW and peak torque of 390 N·m, achieving a 0-100 km/h acceleration in 6 seconds and a fuel consumption of 6.8 L/100 km [3]. - The vehicle features advanced technology including a 15.6-inch 2.5K display, electric tailgate, 50W wireless charging, L2+ level driver assistance, and a 540° panoramic camera [3]. Group 2: Market Context and Strategy - The performance car segment is shrinking as many brands shift focus to electric vehicles, leaving a market gap that Chery aims to fill with the Arrizo 8 PRO [4]. - Chery has maintained a competitive edge in the engine, transmission, and chassis sectors, allowing it to capitalize on the reduced competition in the fuel performance car market [4]. - The Arrizo 8 series has seen significant sales success, with over 400,000 units sold in 33 months and consistently breaking the 10,000 monthly sales mark [4]. Group 3: Future Plans and Market Positioning - Chery plans to introduce a high-performance version of the Arrizo 8 PRO with a 400T powertrain and will promote a modification culture while participating in various racing events [5]. - Despite the challenges posed by the increasing penetration of electric vehicles, Chery believes there is still potential for growth in the fuel performance car segment, targeting young consumers with the slogan "the first performance family car for young people" [5].

Core Viewpoint - BYD has initiated a significant price reduction across 22 models, marking the largest discount yet, which signals the beginning of a new price war in the automotive industry [2][4] Group 1: Price Reductions and Market Impact - BYD's price cuts range from 12,000 to 53,000 yuan, and the promotion will last until the end of June [2] - This is the third price reduction since March, indicating a trend of aggressive pricing strategies in the industry [2] - Other manufacturers like Geely and Chery have also followed suit with substantial price cuts, with Chery's reductions nearing 50% for some models [2] - The automotive industry is facing a historical low profit margin of 4.3% in 2024, with cumulative retail losses approaching 200 billion yuan due to the price war [4] Group 2: BYD's Sales Performance - In 2024, BYD sold 4.2722 million vehicles, generating revenue of 617.38 billion yuan, with an average revenue contribution of 144,500 yuan per vehicle [4] - Despite a leading gross margin of 22.31%, the net profit per vehicle is less than 10,000 yuan, indicating lower profitability in the automotive sector [4] - BYD's sales target for 2025 is set at 5.5 million vehicles, with a domestic market goal of 4.7 million [6] Group 3: Competitive Landscape - BYD faces increasing competition in both the low-end and high-end markets, with competitors like Geely gaining market share [8][10] - The sales of BYD's A0-class models have declined, with competitors like Geely's Xingyuan surpassing them in sales [10] - The Han series has seen a significant drop in sales, reflecting challenges in the 200,000 yuan market segment [10][11] Group 4: Financial and Operational Challenges - BYD's asset-liability ratio stands at 74.64%, which is relatively lower compared to other domestic manufacturers [16] - The company has significantly increased its R&D investment, reaching 54.2 billion yuan in 2024, but faces high operational debts [18][19] - Maintaining high sales growth is crucial for BYD to manage its debt levels and support ongoing R&D investments [20] Group 5: Future Outlook - BYD is focusing on low-end models to stabilize its market position while aiming for overseas expansion, targeting over 800,000 units in international sales [22] - The company has sold approximately 290,000 vehicles overseas in the first four months of the year, indicating potential for exceeding its sales target [22]