Guosen Securities released a research report stating that LEAPMOTOR (09863) is in a phase of rapid growth over the next three years, with estimated revenues of 31.4/56.1/81.4 billion yuan for 2024-2026 respectively. Using the PS valuation method, the company's reasonable Market Cap for 2025 is estimated to be 44.9-50.5 billion yuan, corresponding to a stock price of 35.92-40.41 HKD, with the first coverage in the past year, giving an 'outperform' rating.

Guosen Securities' main points are as follows:

LEAPMOTOR's domestic Business is experiencing rapid growth, alongside international giants entering overseas markets.

LEAPMOTOR is a leading smart electric vehicle company in China, maintaining high revenue growth in recent years, with a turnaround to profitability in gross profit in 2023. The company plans to launch new models (C10/C16) in 2024, and overall sales are rapidly increasing (cumulative year-on-year growth of +100% from January to November 2024), with monthly sales reaching new highs (over 40,000 in November). The company is collaborating deeply with Stellantis, launching its Global Strategy at the Paris Auto Show in October 2024.

The company's advantages stem from strong product capabilities, self-research in the entire electronics and electrical stack, and international cooperation.

The company adopts a strategy of high intelligence and high cost-performance for boutique products. Its electronic and electrical architecture is fully self-researched, achieving low-cost high intelligence, with the 'Clover architecture' iterating to version 3.5. The company has opened overseas operations through partnerships.

The global auto market is divided into five major sectors, with the EU market becoming a new growth area.

The global automotive market is divided into five major sectors: the US, Japan, India, and South Korea; the EU; non-EU European countries; China; and Other regions (such as Asia, Africa, Latin America, and Australia). With the EU tariffs taking effect, the overall situation is relatively mild with room for negotiation, expected to become a new source for auto exports.

EU users prefer low-energy small cars, with three factors driving Chinese car companies to enter Europe.

Self-owned brands in Asia, Africa, Latin America, and Australia are gaining momentum. The total scale of passenger vehicles in the EU is about 10 million units, with a stable brand concentration, but the share of European car manufacturers is declining. Europe favors small low-energy cars, with a high penetration rate of new energy, predominantly hybrids, high user loyalty, and strong purchasing power, while Chinese self-owned brands have yet to break through. Low-energy consumption habits, high price differentials between China and Europe, and strong cooperation among China and European car manufacturers are expected to drive Chinese car manufacturers into Europe. In markets such as Asia, Africa, Latin America, and Australia, Japanese models hold a high share, while domestic brands are currently gaining momentum.

Stellantis has many brands and channels, primarily based in the European market.

Stellantis was formed by the merger of two major European groups, FCA and PSA, boasting a long history and numerous brands. The main market for Stellantis models is Europe, with over half of its sales coming from the EU, but in recent years, sales in Europe have significantly declined.

The company is launching many new products while incorporating high-quality domestic channels and Stellantis's overseas channel resources.

The company will globally launch the B series models in 2025. Domestically, it adopts a Dealers model, which can attract quality stores from former joint venture dealers; overseas, it leverages Stellantis's channels and Operation capabilities to expand from Europe to the Global market. The company's models sold in Europe have strong product strength and high cost performance compared to popular models in Europe.