UBS upgraded Leapmotor (09863) to Buy from Neutral and kept its target price at HK$50, according to ETNet.
The broker said Leapmotor shares fell 15% in the six trading days after its interim results, leaving the market already pricing in concerns over lower 2026 earnings expectations and industry-wide margin pressure. UBS said the selloff has made the risk-reward profile more attractive, with downside largely reflected and several potential catalysts ahead, including faster sales momentum, a new technology launch in September, and greater visibility on a second brand and strategic partnerships.
UBS noted that management cut its 2026 full-year profit guidance to RMB3 billion from RMB5 billion at the interim results briefing because of rising raw material costs, which triggered the sharp share-price decline. The company expects raw material costs to stabilise gradually in the second half and gross margin to recover to 13% to 14% in later quarters. UBS lowered its 2026 vehicle gross margin forecast by 1.1 percentage points to 10.9% and cut its 2026 net profit estimate by 14% to RMB3 billion, while expecting scale benefits, steadier lithium prices and ongoing cost optimisation to support a margin rebound from the second half.
UBS raised its 2026 sales forecast to 1 million vehicles from 900,000 and lifted its 2027 to 2028 sales forecasts by 22% to 25%. It said Leapmotor's August sales rose above 100,000 units for a second straight month, driven mainly by the A-series models and faster overseas deliveries. The company also raised its 2026 export target to 200,000 vehicles from 150,000 and set a 2027 export target of 350,000 to 400,000 vehicles.
UBS said Leapmotor's monthly sales are more than twice those of Xpeng (09868), while quarterly revenue is about 40% higher and vehicle gross margin is 10% to 12%, similar to peers. Even so, its market value is only about 60% of Xpeng's, despite already being profitable.
Catherine
