Core Viewpoint - The report from China Merchants Securities International indicates that the pricing of Li Auto's new model i8 aligns with expectations, while the oil-electric pricing exceeds expectations. The target price is maintained at HKD 138 with a "Buy" rating [1] Company Analysis - The market has a misunderstanding regarding the i8, as the pure electric i-series is not the primary investment value for Li Auto. The potential of the range-extended L series remains significant, which could expand the company's market space by 30-50% [1] - The i8 is viewed as a high-end, slow-moving product, with the i6, set to be released in September, expected to be the true volume product for the pure electric series. Short-term deliveries are not anticipated to have a strong impact [1] Sales Forecast - The estimated monthly sales for the i8 are projected to be between 3,000 to 5,000 units, primarily aimed at validating the pure electric product before paving the way for the i6 [1]

Core Viewpoint - The report from China Merchants Securities International indicates that the pricing of Li Auto's new model i8 aligns with expectations, with the fuel-electric price being better than anticipated. The target price is maintained at HKD 138 with a "Buy" rating [1] Group 1: Company Insights - The market has a misunderstanding regarding the i8, as the pure electric i-series is not the primary investment value for Li Auto; the range-extended L series still holds significant potential [1] - These two factors could expand the company's potential market space by at least 30-50% [1] - The i8 is viewed as a high-end product with a slow market uptake, while the i6, expected to be released in September, is anticipated to be the true volume product for the pure electric series [1] Group 2: Sales Projections - Short-term deliveries of the i8 are not expected to have a strong impact, with estimated monthly sales ranging from 3,000 to 5,000 units, primarily aimed at validating the pure electric product [1] - The i8's stable performance is expected to pave the way for the i6's market entry [1]

Core Viewpoint - The article discusses the strategic adjustments made by Li Auto in response to competitive pressures in the electric vehicle market, particularly following the impressive sales performance of Xiaomi's new car model YU7, which achieved 200,000 pre-orders in just 3 minutes [4][8]. Group 1: Organizational Changes - Li Auto has announced a significant internal restructuring, with President Ma Donghui now overseeing research, supply chain, and sales, reporting directly to CEO Li Xiang [5][7]. - The restructuring aims to create a more integrated approach to production, supply, and sales, enhancing operational efficiency and aligning with strategic goals [5][6]. - The sales department has been integrated into the research and supply chain groups, indicating a shift towards a more cohesive operational model [5]. Group 2: Market Competition - The launch of Xiaomi's YU7 poses a direct threat to established models like Tesla's Model Y and Li Auto's upcoming electric SUVs, i6 and i8 [8]. - Li Auto's extended range L series has faced increased competition from other brands, prompting the company to adjust its sales targets for the second quarter [9]. - The company delivered 92,800 vehicles in the first quarter and initially planned to deliver 123,000 to 128,000 vehicles in the second quarter, but this target has been revised downwards [9]. Group 3: Infrastructure Development - Li Auto has established over 2,500 fast-charging stations and aims to reach 4,000 by the end of the year, adding an average of 4 stations daily [9]. - The company is consolidating its sales regions from 26 to 5 major areas to better allocate resources in a competitive market [9].

Core Insights - Xiaomi's new car, YU7, achieved an impressive sales milestone of 200,000 pre-orders in just 3 minutes, prompting competitors to enter "war mode" [1] - Li Auto has made significant organizational changes, with President Ma Donghui now overseeing research, supply manufacturing, and sales, reporting directly to CEO Li Xiang [1][2] - The restructuring aims to enhance collaboration between production, supply chain, and sales, supporting a strategic to operational closed loop [1] Company Developments - Li Auto's sales and service senior vice president Zou Liangjun will continue as a sales service advisor, while the head of the overseas department has changed from Wang Jin to Wu Zuomin, who has experience in overseas markets [2] - CEO Li Xiang remains focused on product lines, branding, and strategy, with an increased emphasis on artificial intelligence, particularly in the area of advanced driver assistance systems [2] Market Competition - The personnel changes at Li Auto are strategically timed ahead of the launch of two new electric models, positioning the company against competitors like Tesla's Model Y and Xiaomi's YU7 [3] - Li Auto plans to lower its second-quarter sales target, having delivered 92,800 vehicles in the first quarter and initially aiming for 123,000 to 128,000 in the second quarter [3] - The company is consolidating its sales regions from 26 to five major areas to better allocate resources amid increasing competition in both range-extended and pure electric vehicle segments [3] - Li Auto has established over 2,500 fast-charging stations and aims to reach 4,000 by the end of the year, adding an average of four stations daily [3]

Investment Rating - The investment rating for the company is downgraded to Neutral with a target price of HKD 93.62, reflecting a potential downside of 17.3% from the current closing price of HKD 113.20 [1][7][8]. Core Insights - The report indicates that the automotive gross margin for the fourth quarter was below expectations, with a gross margin of 19.7%, which is lower than the market expectation of approximately 20%. This decline is attributed to a decrease in average selling price (ASP) and an increase in per-vehicle costs, including provisions for purchase commitment losses and promotional activities [2][8]. - The company has guided first-quarter sales to be between 88,000 and 93,000 units, with March sales estimated at 32,000 to 37,000 units, indicating that price reductions have effectively stimulated sales recovery. However, the ASP is expected to continue declining to around RMB 250,000 in the first quarter, which is below expectations [2][8]. Financial Overview - The company's revenue for 2023 is projected at RMB 123.851 billion, with a year-on-year growth of 173.5%. For 2024, revenue is expected to reach RMB 144.460 billion, reflecting a growth of 16.6% [3][16]. - The net profit for 2023 is estimated at RMB 11.704 billion, with a significant decline of 673.8% year-on-year. The forecast for 2024 shows a net profit of RMB 8.032 billion, a further decrease of 32.2% [3][16]. - The earnings per share (EPS) for 2023 is projected at RMB 5.95, dropping to RMB 4.03 in 2024, with a forecasted EPS of RMB 4.29 for 2025 [3][16]. Market Competition and Challenges - The report highlights that the competition in the automotive market is shifting from incremental to stock competition, with more competitors entering the range-extended vehicle segment in 2025. This includes the launch of new models from competitors that may impact the company's sales base [8]. - The report expresses concerns regarding the company's ability to maintain its gross margin, particularly with the introduction of new electric models expected to have lower margins, which could further pressure overall profitability [8].

Investment Rating - The investment rating for the company is downgraded to Neutral with a target price of HKD 93.62, reflecting a potential downside of 17.3% from the current closing price of HKD 113.20 [1][7][8]. Core Insights - The report indicates that the automotive gross margin for the fourth quarter was below expectations, with a gross margin of 19.7%, which is lower than the market expectation of approximately 20%. This decline is attributed to a decrease in average selling price (ASP) and an increase in per-vehicle costs, including provisions for purchase commitment losses and promotional activities negatively impacting ASP [2][8]. - The company has guided for first-quarter sales between 88,000 to 93,000 vehicles, with March sales estimated at 32,000 to 37,000 vehicles, suggesting that recent price cuts have effectively stimulated sales recovery. However, the ASP is expected to continue declining to around RMB 250,000 in the first quarter, which is below expectations [2][8]. Financial Overview - Revenue projections for the company are as follows: - 2023: RMB 123.851 billion - 2024: RMB 144.460 billion (YoY growth of 16.6%) - 2025E: RMB 157.981 billion (YoY growth of 9.4%) - 2026E: RMB 202.373 billion (YoY growth of 28.1%) - 2027E: RMB 224.975 billion (YoY growth of 11.2%) [3][16]. - Net profit estimates are: - 2023: RMB 11.704 billion - 2024: RMB 8.032 billion - 2025E: RMB 8.560 billion - 2026E: RMB 10.843 billion - 2027E: RMB 12.458 billion [3][16]. - The report highlights a significant drop in earnings per share (EPS) for 2023, with a forecast of RMB 5.95, declining to RMB 4.03 in 2024, and a slight recovery to RMB 4.29 in 2025 [3][16]. Market Competition and Challenges - The report notes that the company faces significant challenges in terms of sales growth, cost control, and market competitiveness. The competition is expected to intensify in 2025 with the introduction of more range-extended competitors, including new models from rival companies [8]. - The sales forecast for 2025 has been reduced by 7.5% to 558,000 vehicles, reflecting concerns over the sales performance of the range-extended series and new electric models [8].