Bernstein Lowers Li Auto Price Target to $19

Bernstein SocGen Group analyst Eunice Lee lowered the price target on Li Auto (NASDAQ: LI) to $19.00 (from $20.00) while maintaining a Market Perform rating.

“Q4 better than feared, Q1 looks brutal; But cash pile limits downside, Lower TP to US$19.00; Q4 was better than feared, with sequentially narrower operating loss.

Revenue reached RMB 28.8bn (-35% yoy, +5.2% qoq).

Sales volume was 109.2k units (-31.2% yoy, +17.1% qoq), though ASP fell to RMB 250k (-7.1% yoy, -10.1% qoq) due to a weaker mix (higher i6 contribution) and intensified promotions.

Q1 looks brutal, with vehicle gross margin guided to 5% only.

The sequential deterioration is driven by L-series EREV de-stocking, purchase tax subsidies and additional discounts, as well as rising material costs, primarily from lithium batteries.

Q2 may still feel the impact: only L9 de-stocking will be completed in Q1, with the rest of the L-series continuing into Q2, alongside ongoing raw material pressure.

Given these headwinds, we do not expect margins to recover to above the mid-teens in Q2.

The company’s sizeable cash position provides a meaningful downside buffer: the stock trades at c.RMB 140bn market cap versus a cash balance of RMB 100bn.

Even assuming a bearish RMB 10bn cash burn in Q1, the cushion remains substantial. On the upside, the key catalyst is the upcoming L9 launch in Q2.

Hence, despite a much weaker near-term outlook, we see the risk-reward as balanced, if not favourable.”

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