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<Research>CCBI Axes Li Auto (LI.US) TP to US$44.2, Rates Outperform
Recommend 8 Positive 12 Negative 4 |
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CCBI commented in a report that Li Auto (LI.US)'s 1Q slowdown would not affect its full-year plans. The automaker was relatively unscathed by the recent price war. Its channel expansion and launch of new models in March and April would boost momentum in 3FQ24, despite faster deliveries from rival brand AITO. The broker expected Li Auto to maintain its competitive advantage in the large family SUV category from 2023 to 2025, based on brand strength, efficient supply chain, product differentiation, lack of rivals in the premium segment, higher replacement demand for Audi, BMW and Mercedes-Benz midsize SUVs, and upgraded demand from owners of mid-range joint venture SUVs. Taking into account scale and stable battery prices, the broker expected Li Auto's new vehicle margins to be around 21% to 22% from 2024 to 2025, although retail discounts may affect selling and administrative expenses. Considering the intensified competition, the broker dropped its 2024 and 2025 shipment forecasts by 120,000 and 110,000 units each to 500,000 and 640,000 units respectively, and chopped its adjusted earnings forecasts by 12% and 10% to RMB15.6 billion and RMB19.9 billion respectively. CCBI reduced Li Auto's valuation basis to 2x projected P/S ratio, on par with its peers. The broker axed its target price on Li Auto US shares from US$82.4 to US$44.2 accordingly, while maintaining its Outperform rating. AAStocks Financial News |
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