LI AUTO(US:LI) Goldman Sachs·2025-05-30 16:09Investment Rating - The report assigns a "Buy" rating to Li Auto, indicating a positive outlook for the company's stock performance [1][9][10]. Core Insights - Li Auto's 1Q25 results showed a GAAP net profit that exceeded Goldman Sachs estimates and Visible Alpha Consensus by 21% and 33%, respectively, primarily driven by higher vehicle sales [1]. - The company is positioned well for 2025 with improvements in urban NOA performance and a focus on AI, which aligns with the growing trend of intelligent driving [9]. - Li Auto maintains the best net cash position among major Chinese OEMs, which supports future R&D and capital expenditures [9]. Financial Performance Summary - Vehicle sales increased by 5% compared to Goldman Sachs estimates, attributed to a 3% rise in sales volume and a 2% increase in average selling price (ASP) [2]. - The vehicle gross margin was reported at 19.8%, reflecting a year-over-year increase of 0.4 percentage points and a quarter-over-quarter increase of 0.1 percentage points [2]. - SG&A expenses were 9% lower than estimates, indicating improved cost control, while R&D expenses rose by 11% due to increased investment in new vehicle models and AI technologies [2]. Guidance and Future Outlook - For 2Q25, the guidance aligns broadly with estimates, projecting vehicle sales volume between 123,000 and 128,000 units, and revenue between RMB 32.5 billion and RMB 33.8 billion [3]. - Upcoming catalysts include new model launches and advancements in ADAS and AI technologies, which are expected to drive growth [9]. Balance Sheet and Cash Flow Analysis - As of 1Q25, Li Auto reported RMB 102 billion in net cash, with a stable total debt to equity ratio of 12% [4]. - The company experienced a tightening of working capital quarter-over-quarter but showed improvement year-over-year, with stable receivable days and an increase in payable days [4]. Valuation Metrics - Li Auto is currently trading below its historical average 12-month forward price-to-sales (P/S) and price-to-earnings (P/E) multiples, suggesting potential undervaluation [9]. - The 12-month price target is set at $31.7 for ADR and HK$124 for H-shares, indicating an upside potential of approximately 13.6% and 13.9%, respectively [8].