Consumer Discretionary

Report by 86Research

The shares have more than halved from their 52-week high after three pressures hit simultaneously: a full-lineup model changeover, softer China auto demand and rising battery/memory costs. 86Research believes each is now behind the company or turning. The L-series refresh is complete, while upcoming BEV launches including the new MEGA and i9 should broaden the addressable market as EREV and BEV orders become more balanced. Cost pressure is being tackled through greater vertical integration, with in-house cells, BMS and battery packs now shipping and the MACH M100 chip lowering compute costs. Management sees vehicle margin recovering towards 15% by Q4 and 15-20% longer term. With net cash of RMB78.5bn, equivalent to ~95% of the share price, plus a US$1bn buyback, 86Research sees compelling risk-reward.

Consumer Discretionary

Report by 86Research

LI's stock price slumped post earnings despite the auto manufacturer delivering better-than-expected Q2 results and providing Q3 guidance in-line with market expectations. However, investors were left disappointed as management failed to offer clear long-term sales guidance or a detailed plan for the development of BEVs. 86Research thinks the market is overlooking the steady growth in LI's EREV sales, excellent cost and expense control, and the strategic capabilities of its management team, which are supporting the long-term development of the company. They view the market concerns as excessive and have been “pounding the table” recommending investors buy the stock at the current price!

Consumer Discretionary

Report by Sandalwood Advisors

Li Auto, one of Tesla's top EV rivals in China, beat expectations and set a new monthly record with over 40,000 monthly car deliveries in Oct 23. Soon after this new milestone was announced, Li's stock price popped 15%. The China data (Payments & Auto Insurance) from Sandalwood Advisors helped global investors track Li’s deliveries in real-time, and get an early signal on the strong momentum and better-than-expected results. If you never want to miss an inflection point, Sandalwood launched ‘Alpha Seeker’ which alerts clients to all major +/- trends in Sandalwood data.

Automotives

Report by Silk Road Research

Li Auto updates Third Quarter Delivery Outlook, now expecting to deliver approximately 25,500 vehicles for the third quarter of 2022, revised from the previous vehicle delivery outlook of between 27,000 and 29,000 units. The revision is a direct consequence of supply chain constraints, while the underlying demand for the company’s vehicles remains robust. The company will continue to closely collaborate with its supply chain partners to resolve the bottleneck and accelerate production.

Consumer Discretionary

Report by Silk Road Research

NEV market share continues to rise - SRR expect NEV sales to remain strong in 2021 (+40-60%), with the NEV penetration rate increasing by +150-250 bps, placing China ahead of its path to “20% by 2025”. Highlights Volkswagen as the next China EV play; well placed to gain market share due to its attractive pricing (avg. ~230K RMB) and impressive new launches. Among the domestic brands they prefer Nio and Xpeng over Li Auto.