Leapmotor's June sales hit a record, while Deutsche Bank maintains its Buy rating and expects Q2 earnings recovery

Overview

This is a company update report on Leapmotor (09863.HK) by Deutsche Bank. The report focuses on June and Q2 sales, order trends, gross margin improvement, and the earnings inflection point. Deutsche Bank believes the company achieved record June wholesale sales, driven jointly by domestic and overseas markets, and expects significant improvement in Q2 revenue, gross margin, and net profit.

Core views

The report maintains a positive view on Leapmotor. The main reasons are: first, June wholesale sales reached 93,376 units and Q2 wholesale sales reached 246,332 units, both reflecting strong scale growth; second, domestic sales were approximately 72,000 units and overseas sales approximately 21,000 units, with overseas sales up approximately 581% year on year; third, although June new orders fell 9% month on month to approximately 60,000 units, this mainly reflected the natural normalization of demand after the launches of the A10 and D19, partly offset by new orders for the facelifted C series and D99 MPV; fourth, high Q2 sales generated operating leverage, together with gross profit contributions from strategic cooperation, and the company is expected to swing from a net loss of RMB 390 million in Q1 to net profit of RMB 1.0 billion in Q2.

Analysis framework

The report combines company sales guidance, monthly wholesale sales, weekly new orders, channel research, and management gross margin guidance to assess Leapmotor's short-term operating performance and earnings inflection point. Key variables include wholesale sales, the domestic and overseas sales mix, order flow changes, model replacement cadence, vehicle gross margin, and gross profit contributions from strategic cooperation.

Methodology notes

• Company fundamental researchLinkage analysis of sales, orders, and profit margins

  Assessing the revenue and earnings inflection point of an automaker through sales expansion, order trends, and gross margin changes.

  The report combines June wholesale volume, total Q2 sales, weekly orders, model launch cadence, and gross margin guidance to infer the likelihood of revenue growth, operating leverage release, and a return to positive net profit.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Leapmotor 09863.HK

  Core covered company in the report

  Strengths

  Record June and Q2 sales, with growth in both domestic and overseas markets; significant improvement expected in Q2 revenue and gross margin; substantial implied upside from the target price relative to the current price.

  Weaknesses

  June new orders declined month on month, indicating normalization of the high demand following earlier new vehicle launches; the cost side remains under pressure from storage, power battery, and raw material prices.

  Comparison

  The report compares Q2 performance with Q1, emphasizing 124% month-on-month sales growth, 107% month-on-month revenue growth, an increase in vehicle gross margin from 9.4% to an estimated 13%, and a swing from loss to profit.

  Risks

  Continued order declines, model launch timing falling short of expectations, cost pressure exceeding operating leverage improvements, overseas growth falling short of expectations, and share price and foreign exchange volatility.

Key data

• June wholesale sales93,376 unitsUp 101% year on year and 14% month on month, reaching a record high.
• Q2 wholesale sales246,332 unitsUp 84% year on year and 124% month on month, representing the highest quarterly deliveries since the company's establishment.
• June domestic salesApproximately 72,000 unitsUp approximately 67% year on year and approximately 18% month on month.
• June overseas salesApproximately 21,000 unitsUp approximately 581% year on year and approximately 4% month on month.
• June new ordersApproximately 60,000 unitsEstimated by Deutsche Bank to have declined 9% month on month, reflecting the natural normalization of demand after the launch of earlier new models.
• Q2 revenue forecastRMB 22.4 billionExpected to increase 57% year on year and 107% month on month.
• Q2 vehicle gross margin forecast13%Management guidance is 12% to 13%, above 9.4% in Q1 2026.
• Q2 overall gross margin forecast14.9%Including an RMB 500 million gross profit contribution from strategic cooperation.
• Q2 net profit forecastRMB 1.0 billionA significant improvement from the RMB 390 million net loss in Q1 2026.
• Target priceHKD 70.0012-month target price; the current price on June 30, 2026 was HKD 34.48.

Impact & implications

If Deutsche Bank's forecast is achieved, Leapmotor will move from a phase of high-volume expansion into a phase of earnings validation. Record sales and rising gross margins should help the market reassess its economies of scale, product cycle, and overseas growth capabilities; however, the month-on-month decline in June orders indicates that investors still need to monitor the sustainability of demand following new model launches.

Risks

• Higher storage, power battery, and raw material prices could constrain gross margin improvement.
• June new orders declined month on month; if demand fails to recover, sales sustainability could be affected.
• The timing and market acceptance of facelifted models and subsequent models such as the A05 remain uncertain.
• The sustainability of high overseas sales growth still requires validation.
• The research report cautions that the target price and forecasts are uncertain, and investment transactions may result in losses due to price, foreign exchange, and market volatility.

What to watch

• Whether wholesale sales and delivery trends remain elevated in July and Q3.
• The impact of the facelifted C10, C11, and C16 models on orders and sales.
• The launch timing and order performance of the D99 flagship MPV, B01, B10, Lafa5, and A05.
• Whether actual Q2 revenue, vehicle gross margin, overall gross margin, and net profit are in line with Deutsche Bank's forecasts.
• Whether overseas sales growth is sustained and how much it contributes to economies of scale and margins.