CICC: Maintain Li Auto-W "Outperform Industry" rating with a target price of HKD 155
CICC maintains a "Outperform Industry" rating on Li Auto-W, with a target price of HKD 155, expecting profits to remain unchanged in 2025/26. The company has outstanding competitiveness in the mid-to-high-end new energy market, and the market response to the i8 model launch has been enthusiastic, which is expected to support the company's growth into a leading global automaker. CICC believes that although the short-term automotive consumption structure is declining, long-term replacement demand and product iteration will drive the expansion of the mid-to-high-end new energy market
According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it maintains a rating of outperform for Li Auto-W (02015, LI.US). It maintains its profit forecast for 2025/26. Currently, Hong Kong and U.S. stocks correspond to 24/19x 25E P/E, and the firm is optimistic about the company's pure electric and AI strategies, maintaining target prices of HKD 155 / USD 40 for Hong Kong and U.S. stocks, corresponding to 31/26x 25E P/E, with an upside potential of 29%/46%.
The company has rapidly adjusted over the past two years to navigate through a phase of operational challenges. On July 29, the pure electric model i8 was officially launched, featuring outstanding product capabilities and competitive pricing, receiving a warm market response. With the i series completing the pure electric coverage, the firm is optimistic about the company's leading position in the mid-to-high-end new energy market, combined with overseas expansion, intelligence, and a complete product matrix, which is expected to support the company in gradually becoming a global leading automotive and artificial intelligence enterprise.
CICC's main viewpoints are as follows:
The potential of the mid-to-high-end new energy market is prominent, and the reshaping of the landscape is entering the final stage.
Although the automotive consumption structure is showing a phase of downward trend in 2024, in the long term, the firm still believes that consumption upgrades driven by replacement demand and product iteration will be mainstream, and the mid-to-high-end new energy market is expected to continue expanding. From the perspective of competition, the reshaping of the pure electric market is underway, gradually clarifying the landscape of the mid-to-high-end new energy market. The company has identified the timing window for focusing on pure electric, fully referencing first principles, leveraging the advantages of the pure electric platform, and creating differentiation relative to the extended range series. The firm believes that the market may gradually recognize the aforementioned pure electric strategy.
The launch of the i8 initially corrects market expectations, creating a pure electric hexagonal warrior.
Based on the aforementioned pure electric strategy, the company returns to its product design roots and improves consumer experience, thereby driving MEGA HOME sales to rebound against the trend. The i8 was officially launched on July 29, combining off-road capability, sedan handling, and MPV comfort, innovatively defining the SUV model. Coupled with the upcoming i6 launch in September, it solidifies the home positioning in the pure electric track, possessing differentiated competitiveness. In addition, leading charging experience and efficient core technology self-research have become two major trump cards supporting the competitiveness of pure electric models, aside from intelligent experience.
Long-term development: Multi-dimensional layout builds a moat.
The firm believes that the realization of the pure electric strategy is expected to support the company in challenging the sales level of one million units, with a clear long-term growth path thereafter. In terms of overseas expansion, the company has begun to layout markets in the Middle East, Central Asia, and Europe, referencing the market space of global leading luxury car companies, with a long-term goal of achieving an overseas sales ratio of 30%. In terms of products, the company is upgrading its brand concept from home to private space, and with the further enrichment of the product matrix, it is expected to further support the company in continuously expanding its market share, relying on brand influence, technology reuse capabilities, and supply chain advantages. Additionally, in terms of intelligence, continuous investment to maintain leadership is the technical foundation for the company's long-term transformation into an AGI hardware and software supplier. With the iteration of intelligent driving to the VLA model, model parameters are increasing, and the advantages of data, algorithms, and computing power accumulation are expected to advance towards L4 level in the future.
Risk Warning: Pure electric models may underperform expectations; intelligent driving may underperform expectations; market competition may intensify
