Jingu Financial News | Pu Yin International issued a research report, stating that li auto inc (02015) achieved a gross margin of 21.5% in the third quarter, exceeding the bank's and market expectations. Part of the reason is from rebates from top battery suppliers (about 1.4 percentage points). The company's expense ratio improved significantly, with year-on-year and quarter-on-quarter decreases of 1.8 and 4.5 percentage points respectively. Therefore, the company's operating profit increased by 47% year-on-year and 633% quarter-on-quarter, with a significant improvement in profitability. Li Auto's net income in the third quarter was RMB 2.81 billion, roughly flat year-on-year but up 155% quarter-on-quarter. Based on the third-quarter performance and fourth-quarter guidance, the bank has raised its profit forecast for 2025 to 12.53 billion yuan.
The bank stated that driven by L6, li auto inc's delivery volume maintains growth momentum. The bank expects li auto inc's car sales in 2024 and 2025 to reach 0.507 million units and 0.7 million units, maintaining a leading sales position among new forces in car manufacturing. At the same time, the company's significant profit improvement in the third quarter is expected to continue to show profit growth in 2025, maintaining a leading profit position among new forces. Looking ahead to 2025, li auto inc is expected to benefit from the growth dividend of hybrid electric vehicles and gain incremental growth in pure electric vehicle models. The target price for 2025 corresponds to a pe ratio of 17.4x, making the valuation attractive.
The bank reaffirmed the company's buy rating. The bank uses the sum-of-the-parts valuation method, valuing li auto inc using the pe ratio, giving the company a pe ratio of 17.5x and 17.0x for its 2025 car sales and other income respectively. The bank has raised the target price of li auto inc (LI) listed on the US stock market to $30.8, corresponding to a target pe ratio of 17.4x. The target price for li auto inc's W shares has been raised to HK$120.
