Maintain BUY. We expect the launch of GAC’s first model co-developed with Huawei in Jun 2026 to be a positive catalyst, following non-event FY25 results. We also expect exports to double YoY, cost reduction to be more apparent and equity income to stabilize, which help GAC narrow its net loss in FY26E.

4Q25 results in line with profit warning. GAC’s 4Q25 revenue rose 22% QoQ to RMB29.6bn, 23% higher than our forecast. GPM improved 3.8ppts QoQ to -0.8%, beating our forecast by 2.9ppts. Share of profits from JVs and associates in 4Q25 turned negative (RMB-390mn) for the first time since FY12 amid widening losses at GAC Honda. That, along with a largerthan- expected impairment of RMB2.4bn, resulted in a net loss of RMB4.5bn in 4Q25, in line with its previous profit warning.

Aistaland and exports as keys to FY26E. The GT7, the first mid-to-large car under the Aistaland brand co-developed with Huawei, will be launched in Jun 2026, which could be a positive catalyst for GAC’s shares. In addition, GAC aims to double export volume to 0.25mn units for its homegrown brands this year. We expect an increased export mix to lift GPM by 3.3ppts YoY to 0.5% in FY26E, given that overseas GPM was 10.7ppts higher than domestic one in FY25.

Equity income could stabilize in FY26E. We believe GAC Toyota remains better positioned than most of its JV peers in China, with a resilient 4.6% NPM and earnings contribution of RMB2.5bn in FY25. The success of the bZ3X has provided a viable path for Toyota’s NEV transition in China. We expect GAC Honda’s loss in FY26E to narrow from RMB981mn in FY25 with capacity and personnel downsizing. Therefore, we expect GAC’s equity income to be RMB2.2bn in FY26E, vs. RMB2.5bn in FY25. In addition, we also expect more cooperation between GAC and its JVs during NEV transition, which could increase GAC’s income.

Earnings/Valuation. We expect GAC’s SG&A and R&D ratios combined to fall 1.7ppts YoY to 10.5% in FY26E amid its continued cost reduction efforts. Therefore, we estimate FY26E net loss to narrow to RMB4.8bn. We maintain our BUY rating and cut our H-share target price slightly from HK$4.30 to HK$4.20, based on the sum-of-the-parts valuation. We value all GAC’s consolidated businesses at HK$3.40 per share, based on 0.3x (unchanged) our FY26E P/S. We value its JVs and associates at HK$0.80 per share based on 3x (unchanged) FY26E P/E. Our A-share TP of RMB9.00 is based on an A/H premium of 142%. Key risks to our rating and TP include lower sales volume and margins than we expect, slower electrification for its JVs than we expect, and a sector de-rating.