By Jiahui Huang

Shares of Zhejiang Leapmotor Technology rose sharply after the Chinese electric-vehicle maker made a surprise forecast for its first-ever quarterly profit on the back of a steep rise in sales.

Shares were 16% higher at 34.85 Hong Kong dollars, equivalent to US$4.48, on Tuesday afternoon, on track for their largest one-day gain.

Leapmotor, a relative upstart known for its inexpensive EVs and hybrids, late Monday guided for a swing to fourth-quarter profit, adding that it expects full-year sales to rise at least 80% to 30.50 billion yuan, equivalent to US$4.16 billion. The company's full-year sales volume more than doubled to 293,724 vehicles, putting it on par with rivals XPeng, Great Wall Motor and NIO.

Leapmotor cited strong sales volume growth in the final quarter of the year, with average monthly sales of more than 40,000 vehicles. It said a product mix that included higher contributions from more expensive models also helped.

The expected net profit for the final quarter of 2024 would be the company's first since its founding in 2015, and comes a year ahead of its target.

Deutsche Bank analyst Bin Wang described the result as stronger than expected, adding in a research note that the figures implied quarterly gross margin could have reached double digits for the first time. He kept a buy rating on the stock and raised his target price to HK$49.00 from HK$40.00.

Citi Research analysts likewise kept a buy rating and raised the target price--to HK$45.60 from HK$45.10--while also lifting sales and net profit forecasts through 2026.

Citi forecast sales volume for EVs in the sub-200,000 yuan range to rise 52% this year on a "decent" supply-demand relationship. Citi expects mild competition in the segment with rivals including BYD and Geely, they wrote in a research note.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

January 14, 2025 00:46 ET (05:46 GMT)

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