Goldman Sachs: Maintains Buy Rating on Zero Run, Raises Target Price to HK$89.20

Goldman Sachs published a research report maintaining its buy rating on Zero Run (09863). The company's earnings power has improved, and sales have remained strong. As a result, Goldman Sachs raised its net profit forecast for 2025/2026 to HK$8.62 billion/HK$48.87 billion, representing a 70.4%/50.7% increase year-over-year. The report believes that the company has officially entered a period of full-scale profitability and will reach a stable level of profitability in 2026. The report's target price is HK$89.20, equivalent to 22.0x 2026 P/E, which represents a 30.9% upside from the current stock price.

The main points are as follows:

1H25 performance met market expectations

The company announced its 1H25 results: revenue of HK$242.5 billion, up 174.0% year-over-year; and net profit of HK$0.3 billion, turning a loss into a profit. In 2Q25, revenue was up 165.5%/42.0% to HK$142.3 billion, with net profit reaching HK$1.6 billion, also turning a loss into a profit.

Sales grew strongly, driven by new car cycles and product matrix enrichment

In 1H25, the company's sales grew 155.7% year-over-year to 221,664 units, ranking first among Chinese new forces brands in terms of sales volume. In 2Q25, sales grew 152%/53% to 134,112 units.

Profitability has improved significantly, with operational efficiency continuing to rise

The company's gross profit margin showed a significant improvement from 1.1% in 1H24 to 14.1%. This was primarily due to the scale effect of increased sales and the company's ongoing efforts to reduce costs.

High-end and globalization strategies are advancing, with ample momentum for long-term growth

The company is actively pushing forward its high-end strategy based on LEAP3.5 technology, announcing plans to launch new car models that will target higher-end markets.