Chery (9973.HK) Initiate at Buy/HK$36 TP; Largest Export Brand in China

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Chery (9973.HK) Initiate at Buy/HK$36 TP; Largest Export Brand in China

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09 Jul 2026 04:05:09 ET │ 43 pages

Chery (9973.HK)

Initiate at Buy/HK$36 TP; Largest Export Brand in China

CITI'S TAKE

Chery was formed in 1997 and is the third-largest auto maker (FY25 2.7m

units) in China, and also the largest in terms of exports (1.3mn). We initiate

at Buy with TP of HK$36 (9x/7.6x 26E/27E PER) and forecast 16% 26-28E Buy

NP CAGR, also with higher ROIC/asset-turns than industrial peers such as Price (08 Jul 26 16:10) HK$25.62

BYD/Geely/GWM. Our Buy rating is premised on the belief the sector is at a

Target price HK$36.00historical cyclical bottom in July and: (1) The stock is likely undervalued due

to its short trading history since Sep25; (2) China PV export market share Expected share price return 40.5%

concentration ratio remains very high in 5M26 (export CR5 at 95% in W. Expected dividend yield 4.1%

Europe, higher than domestic China CR5’s ~60%); (3) Chery will establish

Expected total return 44.6%830k overseas capacity in FY26 and likely capture Japan/Korea brands

market share overseas; (4) The stock offers 4.1% 26E dividend yield, and Market Cap HK$148,816M

strong FCF conversion rate. US$18,974M

Attractive valuation — (1) Our TP of HK$36.0 is based on 9x 2026E P/E, 1stdv

below sector avg since 2016 to reflect export geopolitical risks and industry-wide

margin pressure. (2) Both sector/Chery valuation at the bottom: the sector is Price Performance

trading at P/E valuation bottom of ~8x since 2016 (Fig 1), same as Chery at lowest

(RIC: 9973.HK, BB: 9973 HK)P/E valuation ~6x since listing (Fig 2). (3) In capital intensity and ROIC, Chery

outperformed BYD/Geely/GWM (Fig 7); Moreover, Chery’s FY26E export volume-