Leapmotor 1Q26 First Take: Overall, the first quarter of FY26 did not carry forward the company's usual operational discipline. The print is concerning.

Despite a decent delivery print for an industry off-season and reasonable cost control, both revenue and GP fell short. Revenue was RMB 10.82bn, a slight miss vs. market. GP missed by about 40%, which weighed on sentiment.

On margins, GPM fell 550bps YoY; even stripping out roughly RMB 200mn of GP uplift from strategic partnerships, GPM was still down 390bps YoY. Management added that lower output increased per-unit manufacturing costs.

The market has largely priced in several factors.

1) Management had guided to a sequential decline for Q1 due to seasonality on the Q4 call. This was flagged in advance.

2) Mix shifted down-market as T03 rose from 11% in Q4 to 22% in Q1, while the lower-price A10 started to ramp in Mar, pressuring ASP. This further diluted the model mix.

On opex: selling expenses were RMB 680mn, seasonally softer and broadly in line. R&D was RMB 1.04bn, a slight miss tied to project timing. G&A came in at RMB 440mn vs. the market’s RMB 420mn, essentially in line and largely seasonal.

OP was -RMB 410mn, better than the market’s -RMB 540mn, implying sizable non-recurring items this quarter. More color should come on the call.

a) Management’s explanation for the per-vehicle margin decline. Details will help quantify the impact.

b) Q2 guidance. It will frame the near-term recovery trajectory.

c) Sustainability of the strategic partnership uplift. This affects visibility on GP support. Dolphin Research will publish a follow-up note; stay tuned. $LEAPMOTOR(09863.HK)