LI AUTO(02015) 广发证券·2024-07-07 02:01Investment Rating - The report assigns a "Buy" rating for both Hong Kong and US stocks of the company, with a target price of 106.55 HKD per share and 27.23 USD per ADS respectively [4]. Core Insights - The company has significant potential for profit growth in the mid to long term, particularly in the market for passenger vehicles priced above 200,000 RMB, which accounts for approximately 84% of the industry's steady-state profit center [11][13]. - The company has demonstrated resilience through three historical turning points, showcasing its ability to quickly correct mistakes and iterate on its product offerings [12][18]. - Short-term focus should be on the company's performance in the high-end vehicle market, potential breakthroughs in overseas exports, and the rollout of new electric models [12][36]. Summary by Sections 1. Long-term Market Potential - The target market for the company is lucrative, with the profit from passenger vehicles priced above 200,000 RMB representing about 84% of the industry's steady-state profit center [11][13]. - In 2023, Chinese brands captured approximately 16% of the profits in the passenger vehicle market above 200,000 RMB, reflecting a year-on-year increase of 6.4 percentage points [11][15]. 2. Historical Turning Points - The company has successfully navigated three critical turning points: 1. After a strategic misstep with the Mini SEV, the company pivoted to focus on the six-seat SUV market, demonstrating strong market selection and product definition capabilities [12][18]. 2. In response to increased competition from Huawei's partner car manufacturers, the company accelerated product and organizational iterations to support the successful launch of the L series [12][18]. 3. Following underwhelming sales of the Ideal MEGA, the company quickly reassessed and redirected resources to stabilize the sales and market share of the L series [12][18]. 3. Short-term Focus Areas - The Ideal L6 is expected to stabilize and increase the company's market share in the high-end vehicle segment, leveraging brand momentum [12][36]. - The company is exploring overseas markets, particularly in the Middle East, which presents significant growth opportunities [12][36]. - The rollout of new electric models, enhanced by advancements in smart driving and ultra-fast charging, is anticipated to validate the brand's strength [12][36]. 4. Profit Forecast - The company is projected to achieve earnings per share (EPS) of 3.89, 5.14, and 7.02 RMB for the years 2024, 2025, and 2026 respectively, with a corresponding price-to-earnings (P/E) ratio of 25 times for 2024 [4][3].