Goldman Sachs analyst Tina Hou maintained a Buy rating on Li Auto Inc
Li Auto is a leading pure New Energy Vehicle (NEV) player, with a 5% NEV market share in China as of the first quarter of 2024 (17% and 39% market share in China's premium PV and premium NEV market, respectively).
As Hou noted, the company will have the most potent model pipeline of 5 new launches and the most vigorous sales network expansion of 400 stores in 2024.
The analyst expects the competitive positioning of Battery Electric Vehicle (BEV) models and deepening sales network to drive another leg of growth for Li Auto.
With continued scale economics and operating leverage, Hou expects Li Auto to deliver the fastest earnings growth and generate top-tier free cash flow among her China auto OEM coverage.
Over the past six months, Hou noted signs that Li Auto has not only caught up with industry leaders in terms of urban NOA (navigate on autopilot) performance but has also become one of the best in the market. The improvement has resulted in a higher take-rate of its Max version models and an improved vehicle gross margin.
Looking into 2025, the company expects to achieve L3 autonomous driving capability utilizing its current "End-to-End + VLM" architecture and MPI (mile per intervention) of 1 takeover per 500km.
With Li Auto's strengthening focus on AI and visible improvements in its urban NOA performance, Hou noted the company is well positioned to benefit from the ongoing intelligent driving trend, supporting volume growth with a better Max version blend, margin improvement, and ongoing BOM cost reduction.
Hou projected fiscal 2024 revenue of 144.13 billion Chinese yuan and EPS of 3.30 Chinese yuan.
Price Action: LI stock is up 1.04% at $24.24 at last check Thursday.
