Let's talk about $Li Auto(LI.US). An interesting detail: this month it was singled out again, not because of the new L series models, nor because of the MEGA, but because the weekly sales data for the Q1 pure electric i series quietly surged into the top three in its market segment.

The biggest controversy about Li Auto has always been "will extended-range be replaced by pure electric, and if so, does Li Auto still have a story?" For the past two years, the market's attitude has been "once the extended-range dividend is gone, it's over." Now that the i series data is picking up, the narrative chain is actually being sustained—the transition from extended-range to pure electric hasn't fallen behind, which is the most crucial signal.

But don't get too excited. The domestic EV price war continues. Xiaomi SU7 Pro, Nio's Ledao, and Huawei-affiliated new models are all forming crossfire against Li Auto in the 200,000-300,000 yuan price segment. Li Auto's current dilemma isn't that cars aren't selling; it's that the gross margin per vehicle is under pressure—the Q4 gross margin per vehicle was already dragged down a notch by XPeng and Nio's subsidies. There's a difference between the Hong Kong and A-share markets. For the Hong Kong stock market in 2015, there was a common discount-premium cycle against the US-listed ADR LI. It's currently at a slight discount; the arbitrage window isn't big but it's also not expensive. For pure Hong Kong stock players, I think this level is suitable for testing the waters with a small position, betting on a double play from a QoQ increase in Q2 i series deliveries and a gross margin recovery. However, heavy positions are not recommended—there are too many variables in this industry, and every Huawei launch event can hit Li Auto's sentiment.