Core Viewpoint - Leapmotor reported a net profit of RMB163 million in 2Q25, exceeding forecasts by RMB115 million, indicating strong sales momentum expected to continue into FY26E [1][3] Financial Performance - Revenue for 2Q25 increased by 42% quarter-on-quarter to RMB14.2 billion, aligning with prior forecasts [2] - Gross margin in 2Q25 decreased by only 1.3 percentage points quarter-on-quarter to 13.6%, which is 0.9 percentage points higher than estimates, despite ongoing discounts and a price war [3] - Leapmotor achieved a positive operating profit of RMB61 million in 2Q25, marking the first time in history, supported by government grants [3] Sales Forecast - Management provided guidance of 170,000-180,000 units for 3Q25, surpassing previous expectations, leading to a revised FY25E sales volume forecast of 600,000 units, an increase of 50,000 units [3] - The new D-series SUV is set to debut in October 2025, with deliveries starting in 1Q26, earlier than anticipated [3] - Projected sales volume growth for FY26E is now 900,000 units, reflecting a 50% year-on-year increase, with overseas sales expected to double due to local production in Malaysia and Europe [3] Profitability Outlook - FY25E gross profit margin forecast has been raised by 1.6 percentage points to 14.5%, driven by economies of scale and high-margin other income [4] - FY25E net profit forecast has been increased by 220% to RMB927 million, with FY26E net profit projected to surge by 257% year-on-year to RMB3.3 billion [4] Valuation - The target price has been raised from HK$72.00 to HK$80.00, based on a 1.1x FY26E price-to-sales ratio, corresponding to a 30x FY26E price-to-earnings ratio [5]