Key Takeaways:
Zhejiang Leapmotor Technology reported H1 2026 net profit of RMB210 million, up 600% from a year earlier, on record revenue of RMB38.11 billion.
Overseas sales could reach about 200,000 vehicles this year, management said on the earnings call, as exports emerge as a second growth driver for the Stellantis-backed automaker.
Gross margin narrowed to 11.7% from 14.1% a year earlier, as rising raw material costs and a shift in product mix offset the delivery gains. Gross profit rose 29.7% to RMB4.45 billion, while non-IFRS adjusted net profit fell 18.2% to RMB270 million, reflecting lower share-based payment expenses in the reported figure.
The results keep Leapmotor on track toward its full-year target of 1 million vehicles, a pace that requires average monthly deliveries of about 108,449 units over the remaining five months, above July's record of 101,267.
Leapmotor delivered 356,487 vehicles in the first half, up 60.8% year on year, ranking first among China's emerging auto brands by sales and fourth globally among new energy passenger vehicle makers, behind BYD, Tesla and Geely, based on comparable registrations from January through May.
Exports surged 372.6% to 96,294 vehicles, accounting for 27% of total sales and already exceeding the full-year 2025 figure. Management targets 350,000 to 400,000 overseas sales in 2027.
Gross margin recovered to 12.6% in the second quarter, up 3.2 percentage points from the first quarter, indicating profitability began to improve sequentially.
Net cash generated from operating activities fell 24.1% to RMB2.17 billion, as advance inventory stocking increased procurement spending. Free cash flow dropped 83.7% to RMB140 million. Cash and cash equivalents, restricted cash, time deposits and certain financial assets totaled RMB38.59 billion at the end of June.
Research and development expenses rose 22.8% to RMB2.32 billion, while selling expenses increased 41.1% to RMB1.99 billion on greater advertising and promotional activity.
Leapmotor's product portfolio now spans the RMB60,000-to-RMB300,000 price range. The A10 SUV hit a 100,000-unit production milestone 135 days after launch, while the D19 large SUV delivered 10,043 units in July. The company launched the A05 compact EV, starting at RMB63,900, on Aug. 11.
The company operates 1,064 sales outlets and 562 service locations across 298 Chinese cities. Cumulative global deliveries surpassed 1.6 million units by the end of July. Earnings per share and any interim dividend were not disclosed.
The margin recovery and export momentum give Leapmotor a path to sustained profitability, though the sharp drop in free cash flow bears watching. Investors will track monthly deliveries against the roughly 108,000-unit pace needed to hit the 1 million target, with the September launch of a new-architecture assisted-driving solution the next event to watch.
This article is for informational purposes only and does not constitute investment advice.
