According to a Goldman Sachs report, LI AUTO-W (02015.HK) -0.650 (-0.824%) Short selling $271.36M; Ratio 24.691% management has reiterated boosting sales as its current top priority, and that it expected profit margins to bottom out in the 2Q24.
The broker considered the next few quarters as a transition period for LI AUTO to adjust its strategy, including the product launch schedule, with the launch of battery-electric vehicle (BEV) SUV models delayed from 2H24 to 1H25. Prices of L7/8/9 and Mega models were also cut. Although company management has no plans to further reduce prices, the broker expected that in the face of competition in the market, LI AUTO will further cut pieces on 2H24.
In addition, the broker noted that the automaker will adjust the pace of sales network expansion, close inefficient shops and optimise human resources in response to new sales targets this year.
Goldman expected the price reduction to enhance the competitiveness of LI AUTO's models and increase orders and sales volume, with the price of L7/8/9 predicted to be further reduced by RMB10,000 in 3Q24. Sales forecasts were cut given the delay in the launch of BEV models. Citing the above factors, the broker lowered its earnings forecast on the carmaker for FY24-FY26 by 21-31%.
Goldman reduced its target price for LI AUTO H-shares by 12% to HK$149, while the rating of Buy was maintained.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-05-24 16:25.)
