One of the market's previously hottest auto stocks is currently experiencing a painful period.
On the afternoon of July 13th, shares of Seres Group Co.,Ltd. (SHSE: 601127) hit the daily limit-down, bringing its year-to-date decline to over 50%. Its Hong Kong-listed shares saw a slight recovery from the day's low in late trading but ultimately closed down 13.68%.
The direct trigger was the company's preliminary forecast for a first-half net loss, but the downward trend in its share price did not begin with this announcement.
Over the past six months, signals have emerged regarding the product cycle, profitability, and cost changes for its AITO brand. The loss forecast merely consolidated these issues onto the income statement.
In the first half of 2025, SERES reported a net profit attributable to shareholders of 2.941 billion yuan, an 81.03% year-on-year increase. At that time, deliveries of the AITO M9 exceeded 62,000 units and the M8 surpassed 35,000 units, with these higher-priced models supporting the brand's performance in the premium SUV market.
In the first quarter of this year, changes first appeared in the model mix and profit growth rate. SERES revenue reached 25.746 billion yuan, up 34.46% year-on-year, while net profit attributable to shareholders was 754 million yuan, a mere 0.89% increase. Non-GAAP net profit fell 73.87% to 103 million yuan, and the gross margin also declined by 1.38 percentage points compared to the same period last year.
Revenue continued to grow, but profits did not keep pace.
A report from China Merchants Securities in May 2026 noted that first-quarter sales of the AITO M9 fell 49.6% year-on-year, the M5 dropped 47.52%, while the M7 rose 122.26%. During the same period, the growth rate of operating costs exceeded that of revenue, and expenses for R&D and sales also increased significantly. As the M9 entered its model changeover cycle, the sales baton passed more to models like the M7.
However, with new models not yet achieving stable deliveries and older ones in a transition phase, profitability came under pressure first.
After April, AITO began introducing new products to fill this gap. The new-generation M9 and the M6 launched successively, with the M6 accumulating over 30,000 deliveries within 54 days of launch. The all-new M9 secured over 42,000 firm orders within a month of its debut. Data from SERES shows AITO delivered approximately 168,200 new vehicles in the first half, a 10.2% year-on-year increase.
The pressures of the product transition period did not immediately dissipate.
In June, SERES vehicle sales were 30,300 units, down 30.19% year-on-year; overall group sales were 36,200 units, a decrease of 28.10%. On June 11th, Citigroup downgraded its revenue forecasts for SERES for 2026-2028 by 15% to 17%, citing tepid sales performance and intensifying competition.
A report from Kaiyuan Securities on July 4th mentioned that the year-on-year sales growth rate for the entire AITO lineup has been narrowing since the beginning of the year, turning negative since May, with recent performance of the M8 and the facelifted M7 being relatively weak. The report attributed this to heightened competition in the premium SUV segment, rapid new model iterations, and some consumers waiting for new releases. Based on sales and competitive pressures, Kaiyuan Securities lowered its forecast for SERES's 2026 net profit attributable to shareholders by 36.2% to 6.43 billion yuan.
Beyond the product transition, rising costs further squeezed profits in the second quarter.
Zhang Xinghai stated publicly in June that price increases for memory chips and lithium carbonate (rising from about 80,000 yuan/ton to 180,000 yuan/ton) increased the average manufacturing cost per AITO vehicle by 15,000 to 20,000 yuan. In its semi-annual performance forecast, SERES also listed rising prices for memory chips, industrial metals, and lithium carbonate as reasons for the expected loss, while noting that the company adjusted the book value of some existing assets with limited adaptability following technological and model updates.
This led to the concentrated appearance of losses in the second quarter. SERES expects a net loss attributable to shareholders of 1.5 to 1.8 billion yuan for the first half, compared to a profit of 754 million yuan in Q1, implying a loss exceeding 2.2 billion yuan in Q2. Within this, SERES automotive business is expected to post a loss of 1.05 to 1.3 billion yuan for the first half.
SERES has emphasized its ample cash reserves and robust asset-liability structure. Orders and deliveries for the new M9 and M6 have also begun to grow. However, for this round of share price decline, the market's primary observation is that the model changeover period has extended the timeline for profit recovery, while cost inflation and asset adjustments amplified profit pressure in the second quarter.
With the formal disclosure of the interim report upcoming, the market will see the specific impact of cost increases and asset adjustments. As for how much profit the new M9 and M6 can contribute, that will have to wait for the third-quarter financial results.
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