Zhao Yin Guo Ji·2024-11-04 00:08Investment Rating - The report maintains a BUY rating for Li Auto Inc. with a target price raised from US$25.00 to US$30.00, indicating a potential upside of 20% from the current price of US$25.01 [2][4]. Core Insights - Li Auto's 3Q24 earnings are considered strong, driven by an increase in average selling price, gross margin, and effective operating cost control. The main drag on earnings was attributed to share-based payments and fair value losses from investments [2]. - Despite limited information on new BEVs for 2025, the company is believed to be establishing a solid foundation with comprehensive charging infrastructure, larger showrooms, and advancements in autonomous driving technologies [2]. - The report suggests that the recent drop in share price following the 3Q24 results may present an opportunity for investors to accumulate shares [2]. Financial Performance Summary - In 3Q24, Li Auto achieved a non-GAAP net profit of RMB3.8 billion, marking the highest in its history, and an operating margin of 8%, the highest recorded [2][9]. - The company’s gross profit margin (GPM) in 3Q24 was 22.2%, which is 1.6 percentage points higher than previous forecasts, aided by effective cost-cutting measures [2][9]. - For FY24E, the sales volume forecast remains at 0.51 million units, with an expected GPM increase of 0.7 percentage points QoQ for 4Q24 [2][7]. Earnings Forecast Adjustments - The report revises up the earnings estimates for 4Q24 and FY25E following a strong performance in 3Q24. The FY25E net profit estimate is raised by 7% to RMB13.2 billion [2][8]. - The FY25E sales volume forecast is adjusted from 0.65 million units to 0.66 million units, reflecting stronger-than-expected sales of the L6 model [2][8]. Valuation Metrics - The report highlights a projected operating margin of 9.1% for 4Q24, which would drive a net profit of RMB4.3 billion for that quarter [2][9]. - Key valuation metrics include a P/E ratio of 15.0 for FY24E and a projected P/E of 10.0 for FY26E, indicating a favorable valuation outlook [3][12].