Soochow: First coverage of CHERY AUTO (09973) with a "Buy" rating, multi-brand synergy expansion to expand growth boundaries.

Soochow released a research report stating that the expected net profit attributable to shareholders of CHERY AUTO (09973) for the years 2025-2027 is expected to be 18.4/21.1/25.4 billion yuan, respectively. Selecting H-share listed car companies Great Wall Motor/Chongqing Sokon Industry Group Stock/BYD COMPANY/GEELY AUTO as comparable companies, the corresponding PE averages for 2025-2027 are 14/11/8 times (as of February 4, 2026). Considering the strong momentum in the company's new energy development and solid export position, the bank believes that the company should enjoy a higher valuation and initiates coverage with a "buy" rating. The main points of Soochow are as follows: Basic situation: Global technology-based car company CHERY AUTO was established in 1997 and initially entered the mainstream and entry-level passenger car markets with models like Fengyun and QQ. In recent years, the company has accelerated its transformation towards globalization and intelligentization. The company currently has a system of balance between state-owned assets, strategic investors, and management shares, with state-owned assets not directly intervening in operations, deep binding of management, synergy provided by strategic investors, and clear equity structure. The development of new energy and exports has helped improve the company's financial data: New energy brands such as Fengyun, Shanhai, Xingjiyuan, iCAR, and Zhijie have achieved scale delivery; overseas revenue continues to grow. Existing brand system: Five major brands covering diverse needs Chery's main brand is positioned in the mainstream mass market, covering core needs of families and exports with high cost performance and multiple power routes; Jetour focuses on SUV segments oriented towards travel and light off-road, emphasizing space, passability, and scene adaptation; Xingtu as the group's high-end brand targets middle to high-end users; iCAR is positioned as a youthful and personalized pure electric brand; Zhijie relies on deep cooperation with Huawei and focuses on intelligent experience. Exports: Deep cultivation for years, stable development 1) Market: Starting from developing markets, expanding to multiple regions. Chery's export market selection shows a phased evolution from starting from developing markets, concentrating on key single markets (Russia), and expanding to Europe. The company has entered the stage of active risk management in the Russian market. 2) Products: Core with Tiggo, multiple brands and energies in parallel. The Tiggo series is the absolute core, with ICE and PHEV running in parallel. Through different energy forms, configuration combinations, and brand packaging, it adapts to and covers different regional markets. Petroleum vehicles are still the basic sales for Chery overseas; new energy models are mainly promoted as structural supplements, with PHEV as the main focus. 3) Channels and capacity: Rapid development according to local conditions. Chery has formed a combination structure of mainly authorized dealer systems overseas, retaining official exclusive agents or establishing local subsidiaries in some countries. In terms of overseas manufacturing layout, Chery adopts a multi-regional KD assembly model to achieve localization and policy compliance. Technological foundation: Platform-based manufacturing capability + self-development and cooperative intelligent driving strategy In 2025, the company will integrate the related businesses of its subsidiaries Xiongshi Technology, Dazhuo Intelligent, and R&D Institute to promote the shift from a dispersed to centralized research and development system. The company clearly adopts a dual-track mode of "self-development + cooperation" based on self-development capabilities supported by leading technology partners such as Huawei and Horizon. In March 2025, Chery released the "Falcon Intelligent Driving" intelligent solution. Chery's vehicle platform system consists of traditional fuel platforms and new energy platforms running in parallel, forming a platform structure layered according to price bands and technological paths. Risk Warning: Global economic recovery is lower than expected; L3-L4 intelligent technology innovation is lower than expected; increase in geopolitical uncertainty; domestic price competition exceeds expectations; exchange rate fluctuation risks, etc.