Bank of America raises target price for Seres! New M7 orders exceed expectations, Q3 profit estimated at 3 billion

Bank of America Merrill Lynch is optimistic about the strong order performance of the new AITO M7 and the company's continued profitability expansion prospects, significantly raising the target price for Seres to 190 yuan.

On October 9, according to Chasewind Trading Desk, Bank of America Merrill Lynch said in its latest research report that although the price range exceeded market expectations, the new M7 has shown strong order performance since its launch on September 23.

According to Bank of America Merrill Lynch analyst Joey Yang, the new AITO M7 has shown strong order performance since its launch on September 23, with non-refundable orders possibly reaching over 70,000 units within two weeks, with a conversion rate of around 30%.

The bank believes that the strong brand power of the AITO brand and its robust product portfolio will drive Seres' continued profitability expansion. It is expected that Seres' third-quarter net profit will reach 3 billion yuan, up 23% year-on-year and up 36% from the previous quarter.

Bank of America Merrill Lynch raised its earnings per share forecasts for Seres for 2025-2027 by 5%, 12%, and 11% respectively, raising the target price from 160 yuan to 190 yuan, and maintains a Buy rating.

New M7 order conversion rate reaches 30%, capacity layout supports growth

Bank of America Merrill Lynch estimates that the new AITO M7 has received more than 70,000 non-refundable orders within two weeks of launch, a number calculated from the previous 230,000 intended orders and a conversion rate of about 30%.

According to information from the new M7 launch event, the model’s maximum monthly production capacity is 30,000 units, this level of capacity can support the fourth-quarter sales target of 90,000 units for the M7. To further stimulate sales, Seres announced purchase tax subsidies for customers who place orders for the new M7 before November 3, 2025.

It is worth noting that the entire HIMA alliance (including AITO, Zhijie, SAIC, Xingji Era, Maybach, and other brands) received a total of 48,500 non-refundable orders during the 2025 National Day period, with the daily average order volume up 48% year-on-year.

Q3 performance preview: per-car net profit of 24,000 yuan

Bank of America Merrill Lynch expects that Seres' third-quarter AITO sales will reach 124,000 units, up 12% year-on-year and up 16% quarter-on-quarter. Among them, the sales of the M9, M8, M7, and M5 are expected to be 31,000, 62,000, 17,000, and 15,000 units respectively.

Taking into account that the M9's share of sales in Q3 fell from 37% in Q2 to 25%, Bank of America Merrill Lynch expects the third-quarter gross margin to fall slightly quarter-on-quarter to 29.1%. However, the operating expense ratio is expected to marginally improve due to better operating leverage.

Based on comprehensive calculations, the institution expects third-quarter net profit to be 3 billion yuan, equivalent to a per-car net profit of 24,000 yuan for AITO. By model, the per-car net profits for the M9, M8, M7, and M5 are estimated at 37,000, 27,000, 10,000, and 1,000 yuan, respectively.

Full-scale earnings forecast upgrade, double support from valuation methodologies

Earnings forecasts fully upgraded, new target price set at 190 yuan

Based on the latest order data and strong profitability performance, Bank of America has raised its financial forecasts for Seres for the next three years:

Revenue forecast: Raised 2025, 2026, and 2027 revenue forecasts by 4%, 5%, and 4%, respectively.

Earnings per share (EPS) forecast: Raised 2025, 2026, and 2027 EPS forecasts by 5%, 12%, and 11%, respectively.

In the end, Bank of America raised Seres' target price (PO) from the previous 160 yuan to 190 yuan, and reiterated its “Buy” rating.

The investment logic is that AITO's strong brand equity, solid product portfolio, and leading intelligent driving solutions will continue to drive Seres' profitability expansion.

The report details the basis for the 190 yuan price target, which is the average of two mainstream valuation methodologies:

Discounted Cash Flow (DCF) Method: Based on a 14.4% weighted average cost of capital (WACC) and a 2% perpetual free cash flow growth rate assumption, the resulting fair value is 190 yuan. The valuation uplift mainly reflects higher forecasts of future cash flows.

Price-Earnings (P/E) Valuation Method: Applying a target P/E of 24x (previously 23x) to Seres' 2026E expected EPS yields the target price of 190 yuan.

The report believes that a 24x P/E is based on the company's average P/E over the past year, which better reflects that the company has entered a stable growth phase after shifting from losses to profitability in 2023–2024.

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