Investment Rating - The report maintains a "Buy" rating for Leap Motor (9863.HK) and adjusts the target price to HKD 58.0, indicating a potential upside of 28% from the current price of HKD 45.42 [2][5]. Core Insights - Leap Motor achieved a significant milestone with a total delivery of 597,000 vehicles in 2025, marking a year-on-year growth of over 100%. The company aims to reach a target of 1 million vehicles in 2026, including 100,000 to 150,000 units for overseas sales [10]. - The company reported a revenue of RMB 21.033 billion in Q4 2025, a 56% increase year-on-year, with a gross margin of 15.1%. The net profit for the quarter was RMB 355 million, reflecting a 339% increase compared to the same period last year [12]. - Leap Motor's financial forecasts for 2024 to 2028 show a robust growth trajectory, with revenues expected to reach RMB 155.515 billion by 2028, and net profits projected to turn positive starting in 2025 [3][11]. Financial Performance and Projections - Revenue projections for Leap Motor are as follows: - 2024: RMB 32.164 billion - 2025: RMB 64.732 billion - 2026E: RMB 93.987 billion - 2027E: RMB 131.628 billion - 2028E: RMB 155.515 billion - The company anticipates a net profit of RMB 1.846 billion in 2026, growing to RMB 6.835 billion by 2028, with a net profit growth rate of 243% in 2026 [3][11][13]. - The gross margin is expected to improve gradually, reaching 15.1% by 2028, while the operating profit margin is projected to increase to 4.2% in the same year [11][13]. Valuation - The valuation method used is a sum-of-the-parts approach, applying different price-to-earnings ratios for various segments, resulting in a target price of HKD 58.0, corresponding to a target P/E ratio of 40.2x [15]. - The current price-to-sales ratio for Leap Motor is 0.5x, indicating potential for revaluation [10][15].