Key Takeaways
Chery Auto (09973.HK) shares fell 4.62% after the automaker reported its net profit for the first quarter of 2026 fell 10.3% year-over-year, pressured by a slowdown in China's domestic market.
"Demand for fuel-efficient and new energy vehicle models increased, and with the upcoming launch of the company’s new overseas brand Lepas, CICC expects export performance in 2Q26 to maintain rapid growth momentum," CICC stated in a research note.
The company's net profit was RMB 4.17 billion on revenue of RMB 65.87 billion, which was down 3.4% from the prior year. Vehicle deliveries fell 3% to 566,000 units. However, core profit rose 52% to RMB 3.4 billion, and gross margin improved 3.6 percentage points to 16%.
The results highlight a growing divergence between Chery's international and domestic business. Overseas sales now account for 67% of the total, up from less than 50% a year ago, providing a crucial buffer against domestic weakness and boosting profitability.
The margin improvement was a key focus for analysts, attributed directly to the higher contribution from more profitable overseas markets. This shift helped offset the impact of lower vehicle deliveries and revenue.
In response to the results, BofA Securities lowered its price target on Chery's stock to HKD 38 from HKD 40, cutting its 2026 earnings per share forecast by 8%. CICC maintained its Outperform rating and HKD 40 price target but trimmed its 2026 net profit forecast by 10% to RMB 20.2 billion.
The results place a greater emphasis on the upcoming launches of the iCAR V27, QQ3, and Zhijie V9 models to stabilize the domestic business. Investors will be watching for the company's revised 2026 sales guidance, which Chery announced it will revisit in June.
This article is for informational purposes only and does not constitute investment advice.
