Investment Value Analysis Report of Changan Automobile (000625.SZ)

Based on the data I collected, here is an in-depth investment value analysis report of Changan Automobile.

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Changan Automobile’s 2025 sales results show strong transformation momentum: annual total sales reached 2.913 million units, a year-on-year increase of 8.54%, among which new energy vehicle sales exceeded 1.11 million units, a substantial year-on-year increase of 51.1%, accounting for nearly 40% of total sales [1]. This proportion ranks first among central SOE automakers including SAIC, Dongfeng, GAC, BAIC, and FAW, highlighting Changan Automobile’s leading position in electrification transformation.

However, the outstanding performance on the sales side has not translated into recognition from the capital market. Changan Automobile’s stock price closed down 8.91% for the full year of 2025, with its market value shrinking by approximately RMB 11.6 billion [1]. As of the close on January 16, 2026, the company’s stock price closed at US$11.69 per share, having fallen more than 20% from its 52-week high. This divergence of “growing sales but falling stock price” reflects the market’s deep concerns about the company’s profitability.

Financial data shows that Changan Automobile’s net profit attributable to parent shareholders in the first three quarters of 2025 was only RMB 3.055 billion, a year-on-year decrease of 14.66% [1]. Worse still, Q3 performance significantly missed market expectations: EPS was US$0.08, while the consensus market expectation was US$0.20, with the actual figure falling 61.20% short of expectations [0]. This profit stall directly led to the continuous weakening of the stock price after the release of the Q3 report.

In terms of profit quality, the company’s current ROE is 8.83%, net profit margin is only 4.15%, and gross profit margin is as low as 3.55% [0]. Compared with private automakers such as BYD and Geely Automobile, Changan Automobile is still conservative in market-oriented operations and capital efficiency, with significant room for improvement in profitability.

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As a premium intelligent electric vehicle brand under Changan Automobile, Avatr bears the strategic mission of upgrading the brand, but its financial performance has become a significant drag on the parent company’s valuation. According to the prospectus submitted by Avatr to the Hong Kong Stock Exchange [2]:

Financial Indicators	2022	2023	2024	H1 2025
Operating Revenue (RMB 100 million)	0.28	56.4	152	122
Net Loss (RMB 100 million)	20.2	36.9	40.2	15.9

From 2022 to H1 2025, Avatr’s accumulated losses have exceeded RMB 11.3 billion [1]. Although the loss margin is narrowing (the annualized loss in H1 2025 is significantly lower than that in 2024), continuous capital consumption has exerted substantial pressure on Changan Automobile’s financial statements.

Avatr’s most controversial financial decision is the RMB 11.5 billion investment to take a stake in Huawei Yinwang [2]. This investment is paid in three installments. As of the end of June 2024 when the Series C financing had not yet arrived, Avatr’s cash and cash equivalents on hand were only RMB 6.08 billion, and the first installment of RMB 2.3 billion mainly relied on its own funds and bridge loans [2]. This aggressive capital allocation reflects the company’s strategic competition for the high ground of intelligent driving technology, but it also exacerbated liquidity pressure in the short term.

From a strategic logic perspective, as the core carrier of Huawei’s “CHN” model (a tripartite collaboration between Changan, Huawei, and CATL), Avatr is deeply bound to Huawei. Avatr executives clearly stated: “Within Huawei, it is very clear that no matter which brand it is, Avatr must succeed, because this is their first brand for in-depth cooperation” [2]. This special status is both an advantage and means higher expectations and pressure.

Avatr’s IPO is a key variable affecting Changan Automobile’s valuation. According to the analysis of Shenwan Hongyuan Securities, supported by the central SOE platform, Avatr is expected to become an asset with high attention value [1]. However, from the perspective of valuation transmission, Avatr’s difficulties have multiple negative impacts on Changan Automobile:

: Avatr’s continuous losses directly erode Changan Automobile’s investment income. Avatr lost RMB 1.585 billion in H1 2025, and based on Changan Automobile’s shareholding ratio in Avatr, this loss has a significant drag on the listed company’s profits.

: The RMB 11.5 billion investment in Yinwang could have been used for R&D investment, capacity expansion, or shareholder returns in Changan Automobile’s main business. The resource allocation strategy overly tilted towards a single brand has raised market doubts about capital allocation efficiency.

: Avatr has not yet achieved self-sufficiency, and its business model has not been fully proven, which makes investors assign a higher risk premium to the new energy sector when evaluating Changan Automobile’s overall value.

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According to the analysis of the DCF valuation model [0]:

Valuation Scenario	Intrinsic Value	Premium vs. Current Stock Price
Conservative Scenario	$34.45	+194.7%
Base Scenario	$42.27	+261.6%
Optimistic Scenario	$60.92	+421.1%
Probability-Weighted Valuation	$45.88	+292.5%

The current stock price of US$11.69 corresponds to extremely pessimistic expectations, while based on the company’s historical financial data and analyst consensus forecasts, the company’s intrinsic value has upside potential of nearly 3 times. This valuation divergence mainly stems from the market’s overreaction to profit decline during the new energy transformation period and the risk premium for Avatr’s uncertainties.

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• A successful Hong Kong IPO of Avatr will provide an independent financing channel, reducing financial dependence on Changan Automobile
• After the release of scale effects, Avatr is expected to achieve breakeven in 2026
• Commercialization progress of L3-level autonomous driving technology
• Exceeding the 2025 new energy sales target of 1 million units

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From a technical analysis perspective [0], Changan Automobile is currently in a sideways consolidation pattern:

• Trend Judgment
  : Sideways consolidation, no clear direction
• Key Price Levels
  : Support at $11.61, Resistance at $11.86
• MACD Indicator
  : Shows a bearish signal (no_cross)
• KDJ Indicator
  : K value 16.6, D value 25.3, indicating an oversold opportunity
• Trading Range Reference
  : $11.61 - $11.86

: The stock price may continue to fluctuate in the current range; attention should be paid to the progress of Avatr’s IPO and the 2025 annual report results.

: If Avatr successfully goes public and shows signs of profit improvement, combined with continuous growth in new energy sales, the valuation repair space is considerable.

:

• Intensified new energy price war leads to further pressure on gross profit margin
• Avatr’s IPO valuation falls short of expectations
• Continuous sales decline of joint venture brands (Changan Ford, Changan Mazda)
• Downward macroeconomic pressure affects auto consumption demand

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Changan Automobile is in a critical window period for transformation from a traditional automaker to a new energy one. The achievement of new energy sales accounting for over 40% highlights the effectiveness of its transformation, but Avatr’s continuous losses, the decline of joint venture brands, and the decline in profitability together constitute factors suppressing its valuation.

From a value investment perspective, the DCF valuation corresponding to the current stock price has a significant discount, making it worthy of medium- to long-term allocation. However, investors need to closely monitor the progress of Avatr’s Hong Kong IPO, the 2025 annual report performance guidance, and the improvement of profitability in the new energy sector. Investors with higher risk appetite can accumulate positions at current levels on dips; for conservative investors, it is recommended to wait for clear signals of fundamental improvement before entering.

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[0] Jinling API Market Data - Changan Automobile (000625.SZ) Real-time Quotes, Financial Analysis and Technical Indicators

[1] Eastmoney - “Why is Changan Automobile Being Shunned?” (https://caifuhao.eastmoney.com/news/20260118090542823496760)

[2] Sina Finance - “High Growth Cannot Hide Losses, Avatr’s Over RMB 10 Billion Investment Fails to Secure Competitive Advantages” (https://finance.sina.com.cn/stock/relnews/cn/2025-12-25/doc-inhczaki8951475.shtml)