Fair-Value Report — Zhejiang Leapmotor Technology (9863.HK)
Insider Signal
Signal verified as genuine open-market accumulation. Zhu Jiangming (朱江明) — Founder, Chairman, and CEO of Leapmotor — filed a HKEX Disclosure of Interests (DI) on or around 2026-05-27 showing an increase of approximately 781,400 H-shares (reason code 1101: on-exchange purchase) at an average price near HKD 42.57, totalling approximately HKD 33.26 million for Zhu's individual tranche. This is part of a coordinated May 2026 purchase with concerted party Fu Liquan (傅利泉): together they acquired 11,621,900 H-shares at an average of HKD 41.99, spending a combined HKD ~488 million in the open market in this tranche alone.
| Item | Detail |
|---|---|
| Buyer (individual) | Zhu Jiangming — Founder, Chairman & CEO |
| DI Reason Code | 1101 (on-exchange purchase of H-shares) |
| Zhu tranche (this event) | ~781,400 H-shares @ avg HKD 42.57 = HKD ~33.3M |
| Combined Zhu + Fu Liquan (May 2026) | 11,621,900 H-shares @ avg HKD 41.99 = HKD ~488M |
| Zhu post-event holding | 19.58% (individual); founder group 24.71% |
| Pattern | 6th management purchase in 2 years; cumulative ~HKD 1.7 billion |
| Signal date | 2026-05-27 |
| Current price (June 25, 2026) | HKD 34.02 — down 20% from signal price |
Not a placing, subscription, rights issue, pledge, collateral seizure, intra-group reshuffle, employee scheme, or broker/custodian artifact. Buyer is the company founder with long-tenured economic conviction. Signal is genuine; motive is transparent.
Verified Market Snapshot
| Financial Metric | FY2024A | FY2025A | Q1 2026A |
|---|---|---|---|
| Revenue (CNY B) | 32.16 | 64.73 | 10.82 |
| Revenue YoY | — | +101.3% | +8.0% |
| Gross Profit (CNY B) | 2.69 | 9.41 | 1.02 |
| Gross Margin | 8.4% | 14.5% | 9.4% |
| Net Profit / (Loss) (CNY M) | (2,820) | 538 | (390) |
| Vehicle Deliveries | 293,724 | 596,555 | 110,155 |
| Cash & Liquid Assets (CNY B) | — | 37.88 | n/a |
| Total Debt (CNY B) | 2.71 | 4.45 | n/a |
| Total Equity (CNY B) | 10.07 | 14.12 | n/a |
Sources: HKEX filings, CnEVPost, Gasgoo, StockAnalysis. FY = Dec 31. CNY figures from Chinese-language disclosures. All financial data verified from at least one primary source.
Business Overview
Leapmotor (零跑汽车) is a Hangzhou-based electric vehicle manufacturer founded in 2015 by Zhu Jiangming (previously co-founder of Dahua Technology). The company offers four model series — A (entry, from CNY 65K), B (mainstream), C (mid-premium), and D (flagship) — spanning sedans, SUVs, and MPVs. Key current models include the A10, B10, C10, C16, and the legacy T03 minicar.
Stellantis Partnership (Leapmotor International): In 2023, Stellantis acquired a 21% stake in Leapmotor for EUR 1.5B and formed a 49/51 JV (Leapmotor International) to distribute Leapmotor vehicles outside China. This is highly capital-efficient international expansion — the JV absorbs logistics and distribution investment while Leapmotor receives technology licensing fees. In Q1 2026, overseas deliveries hit a record 40,901 units, 37.1% of total volume. Leapmotor ranked among the top-3 Chinese EV brands in 29 European markets in 2025.
2026 Growth Trajectory: FY2025 deliveries doubled to 596,555 units. May 2026 deliveries reached a record 81,569 (+81% YoY), implying Q2 2026 on track for approximately 200,000–220,000 units. Management targets 1 million deliveries in 2026, which requires massive H2 acceleration. The company is the fastest-growing auto brand globally by brand value in 2026 (Brand Finance, +67% to USD 1B).
Key concern — margin compression: The Q1 2026 gross margin collapse to 9.4% (from 14.9% in Q1 2025) was driven by three factors: (1) A10 launch diluting ASP (entry-level pricing from CNY 65K); (2) global expansion investment and distribution cost absorption; (3) ongoing China price war pressures. The company's EBIT is approximately zero-to-negative on an operating basis, with net income supported by interest income from the CNY 37.88B liquid asset pool. R&D spending remains notably lower than peers XPeng (CNY 8.4B H1 2025) and Li Auto (CNY 10.6B H1 2025), versus Leapmotor's CNY 1.89B in H1 2025 — a potential long-term technology risk.
Valuation
Methodology: Three-scenario DCF (primary) + peer EV/Revenue (cross-check) + reverse DCF (sanity check). DCF run via scripts/dcf.py and scripts/reverse_dcf.py (Damodaran framework, owner-FCF basis). Leapmotor is classified as a high-growth loss-to-profit transition company — FCF-DCF dominates, anchored by the net cash position. No P/E multiple; earnings are too volatile. P/B is a secondary check given the large cash balance.
WACC (from first principles — CAPM)
| Input | Value |
|---|---|
| Risk-free rate (China 10Y CGB, verified June 2026) | 1.75% |
| Beta (EV sector, high-growth cyclical) | 1.60 |
| Equity risk premium (US base ERP) | 5.50% |
| China country risk premium (regulatory, political) | 2.50% |
| Cost of equity | 13.05% |
| Cost of debt (pre-tax) | 4.50% |
| Tax rate (high-tech enterprise preferential) | 15% |
| D/V (debt weight) | 9.1% |
| WACC | 12.21% |
Three-Scenario DCF (CNY billions unless noted)
Revenue base year 2025A = CNY 64.73B. Net cash (broad liquidity basis) = CNY 33.43B (CNY 37.88B liquid assets − CNY 4.45B total debt). Diluted shares = 1,422M. SBC = 0.5% of revenue. Tax rate 15%. All values in CNY; per-share figures converted to HKD at 1 CNY = 1.09 HKD.
| Metric | Bull (25%) | Base (50%) | Bear (25%) |
|---|---|---|---|
| Revenue Forecast (CNY B) | |||
| 2026E revenue growth | +39% → CNY 90B | +16% → CNY 75B | −5% → CNY 61.5B |
| 2027E | +28% → CNY 115B | +20% → CNY 90B | +5% → CNY 64.5B |
| 2028E | +19% → CNY 137B | +14% → CNY 103B | +5% → CNY 67.7B |
| 2029E | +11% → CNY 152B | +10% → CNY 113B | +3% → CNY 69.7B |
| 2030E | +8% → CNY 164B | +8% → CNY 122B | +3% → CNY 71.8B |
| EBIT Margin Path | |||
| 2026E | +1.5% | −0.5% | −4.0% |
| 2027E | +4.0% | +2.0% | −2.0% |
| 2028E | +7.0% | +4.0% | 0.0% |
| 2029E | +9.0% | +6.0% | +1.5% |
| 2030E | +10.0% | +7.0% | +2.5% |
| Terminal growth | 3.0% | 3.0% | 2.0% |
| Terminal ROIC | 15% | 12% | 8% |
| Output | |||
| Enterprise Value (CNY B) | 33 | — | — |
| Enterprise Value (CNY B) | — | 10 | — |
| Enterprise Value (CNY B) | — | — | <0 |
| Equity Value (CNY B, +net cash) | 67 | — | — |
| Equity Value (CNY B, +net cash) | — | 44 | — |
| Equity Value (CNY B, +net cash) | — | — | 33 |
| FV per share (CNY / HKD) | CNY 46.9 / HKD 51.1 | — | — |
| FV per share (CNY / HKD) | — | CNY 30.9 / HKD 33.6 | — |
| FV per share (CNY / HKD) | — | — | CNY 23.3 / HKD 25.4 |
| Probability-weighted FV (25/50/25) | CNY 32.98 ≈ HKD 35.9 | ||
Bear case EV is negative (operating losses outweigh terminal value); equity value is supported entirely by CNY 33.4B net cash. This is the downside floor. Bear FV of HKD 25.4 represents approximately 75% of current price — the cash pile limits downside.
Reverse DCF — What the Price Implies
At HKD 34.02 (CNY 31.21), the market is pricing in only 3.3% flat revenue CAGR for 5 years (holding base-case margins and reinvestment). Alternatively, if base revenue growth materializes, the price implies a sustained 9.34% EBIT margin — which the company has never achieved and is far from today's near-zero.
The 3.3% implied growth is far below the +25.8% volume growth in Q1 2026 and +81% delivery growth in May 2026. This suggests the market is either (a) pricing in severe ASP and margin compression that offsets volume gains, or (b) applying a blanket China EV discount reflecting sector-wide de-rating. The implied growth rate does not require the company to shrink; it merely requires that volume gains be offset by ASP declines and margin erosion — a plausible but not inevitable outcome.
Peer Relative Valuation
Peers selected: China-listed EV OEMs of comparable profile. All multiples approximate as of June 2026; sources: StockAnalysis, Yahoo Finance, CnEVPost, company filings.
| Ticker | Company | Mkt Cap (USD B) | Rev LTM (CNY B) | EV/Rev | Rev Growth | Gross Margin | Net Profit |
|---|---|---|---|---|---|---|---|
| 9863.HK | Leapmotor | 6.2 | 64.7 | 0.36x | +101% | 14.5% (9.4% Q1'26) | CNY 538M |
| 2015.HK | Li Auto | ~13.3 | ~130 | ~0.8x | slowing | ~20% | Profitable |
| 9866.HK | NIO | ~10 | ~115 | ~0.7x | +112% | ~10% | Losing |
| 9868.HK | Xpeng | ~12.5 | ~77 | ~1.3x | +88% | ~14% | Near-zero |
| 1211.HK | BYD | >80 | >700 | ~0.5x | Growing | ~22% | Profitable |
| Peer Median (excl. target) | ~12.5 | — | ~0.7x | ~50% | ~14–20% | Mixed | |
| Leapmotor vs. Median | −51% | — | −49% | Higher | Below | — | |
Peer read: Leapmotor trades at a 49% discount to peer median on EV/Revenue (0.36x vs. 0.7x). At peer median EV/Revenue applied to 2026E revenue of CNY 75B, implied equity value would be approximately HKD 78–90/share — but this premium is not justified without margin recovery. A partial premium (0.5x EV/Rev) implies approximately HKD 48–52/share. Leapmotor's lower gross margins than Li Auto and sub-scale R&D vs. XPeng justify a discount, but the current discount appears excessive given the delivery growth rate. Note: the entire China EV sector has de-rated sharply in 2026 (Li Auto -60% from peak; Xpeng -53% from peak), so "cheap vs peers" may reflect a broader sector that remains under pressure.
Conclusion & Rating
Rating: SPECULATIVE BUY | Price Target: HKD 36 (base) – HKD 51 (bull) | As of: June 25, 2026
The bull case for Leapmotor:
- Founder Zhu Jiangming has bought stock 6 times in 2 years, committing cumulative ~HKD 1.7 billion of his personal wealth — this is the highest-conviction insider signal possible from a Chinese tech-founder.
- The reverse DCF implies only 3.3% revenue CAGR is priced in; actual volume growth for May 2026 was +81% YoY, making the market's implied growth assumption appear excessively pessimistic.
- CNY 37.88B in liquid assets (vs. CNY 4.45B debt) provides a massive cash cushion — even in the bear case, downside is limited to HKD 25.4 (25% below current price). The company has ~10 quarters of cash runway at current loss rates.
- The Stellantis JV is structurally excellent: it limits international capital commitment while generating technology licensing revenue and distribution reach in 29 European markets.
- At 0.36x EV/Revenue, if margins normalize toward 5–7% EBIT in 2027–28, the stock could re-rate meaningfully.
The bear case caution:
- Q1 2026 gross margin collapsed to 9.4% — nearly wiping out the 2025 profitability milestone. If the A10 launch and price-war dynamics are structural rather than temporary, the base case may be optimistic.
- The company burned CNY 390M in Q1 2026 despite +26% volume growth — proving that volume growth alone does not drive profits in China's current EV environment.
- China EV sector de-rating is ongoing and broad; foreign investor risk appetite for China tech is constrained.
- R&D investment is materially below peers; product differentiation risk is real in a market where Huawei/Aito and Xiaomi are raising the technology bar.
- Shares outstanding increased by 135M domestic shares in late 2025 (FAW + Jinyi placements) — dilution continues.
The honest summary: The DCF base case gives HKD 33.6 — essentially current price. The stock is fairly valued in the base case, cheap in the bull case, and offers modest downside protection (cash cushion) in the bear case. The insider signal is genuinely high-conviction but has not yet proven correct (stock is down 20% since the purchase). This is a speculative position: the upside is real (50% in bull) but so is the risk (25% downside in bear). Suitable for risk-tolerant investors with 12–18 month horizon who believe China's EV price war will stabilize and Leapmotor's volume growth will translate to margin recovery.
Key Risks
- Sustained margin compression: A10 launch at CNY 65K may permanently shift mix toward low-margin vehicles. Price war from BYD, Xiaomi, and Huawei-adjacent brands could prevent any recovery.
- 1M vehicle target miss: If deliveries fall short of 700K, revenue and margin leverage do not materialize; base case collapses toward bear.
- Dilution: The company continues to issue new shares (FAW, Jinyi placements); future capital raises are likely if losses persist.
- China EV sector overhang: Foreign investor risk-off and US/EU tariff escalation on Chinese EVs remain ongoing headwinds to the multiple.
- Technology gap: R&D spending at half the rate of XPeng and Li Auto is an existential risk in a market where product differentiation increasingly requires AI-driven ADAS and smart cabin software.
- Insider signal lag: The founder's previous 5 purchases also did not prevent the stock from falling further; insider signal is informative but not a short-term price catalyst.
- Stellantis JV risk: Stellantis is under its own financial pressure (2024–25 restructuring); any JV dissolution or renegotiation would remove the international growth engine.
Sources
- HKEX Disclosure of Interests filings (9863.HK, Zhu Jiangming, 2026-05-27)
- CnEVPost — "Leapmotor sees sixth management stake increase in two years" (June 4, 2026): link
- CnEVPost — "Leapmotor Q1 net loss widen despite sales growth" (May 15, 2026): link
- CnEVPost — "Leapmotor posts 1st annual profit" (March 16, 2026): link
- Gasgoo — "Leapmotor Reports Financial Results of 2025": link
- CarNewsChina — "China EV global sales in May 2026: Leapmotor new historical record": link
- StockAnalysis.com — 9863.HK Financials & Statistics (balance sheet, EV, price; accessed June 25, 2026): link
- Minichart — Annual Report 2025 Summary: link
- TradingEconomics — China 10-Year Government Bond Yield (1.73–1.75%, June 2026)
- Futunn — DI purchase disclosures (multiple 2026 events)
- OFweek — "零跑销量狂飙股价却腰斩，朱江明7.2亿增持也没稳住" (June 2026)
- DCF and WACC: computed via Damodaran-framework scripts (wacc.py, dcf.py, reverse_dcf.py)
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