JPMorgan has released a research report initiating coverage on CHERY AUTO (09973) with an "Overweight" rating and a target price of HK$35, equivalent to 6.5 times the forecast price-to-earnings ratio for next year.

The bank identifies Chery as its top pick among passenger vehicle original equipment manufacturers and one of its key selections in Chinese auto stocks, citing a combination of leading overseas scale and brand recognition, improving economics for new energy vehicles, and one of the strongest liquidity positions among Chinese OEMs.

The bank forecasts Chery's net profit compound annual growth rate from 2025 to 2028 to reach 20%, with earnings forecasts for 2026 and 2027 exceeding market expectations by 3% and 9% respectively.

The bank notes that the current share price reflects only about 4 times the forecast 2027 price-to-earnings ratio and a free cash flow yield of 20%, with nearly 80% of market capitalization composed of net cash. The current price does not fully reflect Chery's growth, returns, and balance sheet strength.