CMB International: Lowers Li Auto-W target price to HKD 115, new car vacuum period drags down performance
CITIC Securities International released a research report stating that Li Auto-W (02015) had lower-than-expected performance in the second quarter of this year, with weak sales growth during the new model transition period. However, profitability is steadily improving, and the delivery of the pure electric new model i8 is proceeding smoothly. The management expects the cumulative delivery target to be between 8,000 and 10,000 units by the end of September, with stable production capacity and supply chain stability. The market acceptance of the i8 is better than expected. It is recommended to buy on dips, maintaining an "overweight" rating, and lowering the target price for Hong Kong stocks to HKD 115 and for U.S. stocks to USD 30, equivalent to a 19 times price-to-earnings ratio for the fiscal year 2026, reflecting a 27% discount to the company's historical average valuation. CITIC Securities International stated that the current market is overly pessimistic about the company's product cycle, neglecting the company's ability to improve efficiency through meticulous management, the expansion potential of channel penetration, and overseas expansion opportunities. The company has over 100 billion in cash, providing sufficient resources to cope with short-term headwinds. It is expected that the third quarter will be the low point for delivery volume, and the launch of the i6 will reverse market pessimism. The firm has respectively lowered its net profit forecasts for Li Auto for 2025 to 2027 (non-GAAP) by 48%, 28%, and 25%, reflecting the pressure on profitability during the new model transition period
According to the Zhitong Finance APP, China Merchants Securities International released a research report stating that Li Auto-W (02015, LI.US) performed below expectations in the second quarter of this year, with weak sales growth during the new car gap period. However, profitability is steadily improving, and the delivery of the pure electric new model i8 is proceeding smoothly. The management expects the cumulative delivery target to be between 8,000 and 10,000 units by the end of September, with stable production capacity and supply chain stability, and the market acceptance of the i8 is better than expected. It is recommended to buy on dips, maintaining an "overweight" rating, and lowering the target price for Hong Kong stocks to HKD 115 and for U.S. stocks to USD 30, equivalent to a 19 times price-to-earnings ratio for the fiscal year 2026, reflecting a 27% discount to the company's historical average valuation.
China Merchants Securities International stated that the current market is overly pessimistic about the company's product cycle, neglecting the company's ability to improve efficiency through fine management, the potential for channel expansion, and overseas expansion opportunities. The company has over 100 billion in cash, providing sufficient resources to cope with short-term headwinds. It is expected that the third quarter will be the low point for delivery volume, and the market's pessimistic expectations will be reversed after the i6 is launched. The firm has lowered its net profit forecasts (non-GAAP) for Li Auto for 2025 to 2027 by 48%, 28%, and 25%, reflecting the pressure on profitability during the new product gap period
