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<Research>Citi Downgrades LI AUTO to Neutral, Cuts TP to $83.1
Recommend 14 Positive 28 Negative 11 |
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In a recent report, Citi Research downgraded LI AUTO-W (02015.HK) from Buy to Neutral and dropped its H-share target price from $100.7 to $83.1, taking into account the downside risk next year due to the ageing of LI AUTO's L-series models and dilution of its EV margins, as well as competition from BYD COMPANY (01211.HK)'s Denza brand. Citi added that LI AUTO's current valuation is equivalent to 20x projected 2025 P/E ratio, which is higher than BYD's 13x, GWMOTOR (02333.HK)'s 12x and GEELY AUTO (00175.HK)'s 8x. According to Citi, the consumer downgrade is unfavourable to high-priced cars, and with high factory inventory (the broker estimated over 40,000 units), BMW is expected to offer more discounts from September to December this year. In addition, LI AUTO's backlog of orders was not strong in August and new orders were flat MoM. If LI AUTO offers more incentives to stabilise sales, the valuation in terms of projected 2025 P/E may become more expensive, but if the company does not offer discounts on the L-series cars, it will make the revenue growth outlook for 2025 uncertain. AAStocks Financial News |
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