Key Takeaways:
CICC maintained its Outperform rating on Chery Automobile (09973.HK) with a HK$35 target price, implying 37 percent upside from current levels.
The bank said the company's 1H26 results met expectations, with overseas revenue growth and improving passenger-vehicle gross margins offsetting currency headwinds. CICC kept its 2026 and 2027 net profit forecasts at RMB 20.2 billion and RMB 25.1 billion, with the target price implying 9x and 7x forward P/E respectively.
Chery reported 2Q26 revenue of RMB 77.4 billion, up 5.5 percent year-on-year and 17.5 percent sequentially, while net profit attributable to owners fell 13 percent to RMB 4.4 billion. First-half overseas revenue jumped 51 percent to RMB 98.97 billion, accounting for 69.1 percent of total revenue, up from 46.3 percent a year earlier. Passenger vehicle gross margin expanded 3.2 percentage points to 15.6 percent, with internal combustion engine vehicles at 18.1 percent and new energy vehicles at 12.8 percent, the latter up 7.6 points.
CICC attributed the margin improvement to export-driven scale and product mix, which offset cost pressures. The bank estimated core profit grew at a high double-digit rate in 1H26 after excluding RMB 5.5 billion in lower foreign-exchange gains and one-time disposal income. Management and R&D expenses rose as Chery expands globally and invests in electrification and intelligent driving.
CICC raised its 2026 export forecast to 2 million vehicles, citing Chery's use of KD assembly, joint ventures and acquisitions for overseas capacity. The bank noted the company's diverse powertrain lineup — HEV, PHEV and BEV — positions it to serve differentiated market demand. Domestically, dealer destocking in the first half should ease, supporting a gradual sales recovery.
The Luxeed V9, co-developed with Huawei, won the July MPV sales crown with an average transaction price of RMB 500,000, while the Luxeed RX opened pre-orders at RMB 299,800. CICC expects the Luxeed brand to drive Chery's premium push in the second half. Peer Geely Auto reported H1 revenue of RMB 173.6 billion, up 15 percent, with core profit up 46 percent to RMB 9.68 billion.
The maintained rating and target price reflect continued confidence in Chery's export-led growth story. Investors will watch whether the company can sustain overseas momentum as trade policy risks in key markets remain a key variable.
This article is for informational purposes only and does not constitute investment advice.
