CICC: Maintains "outperform" rating on LI AUTO-W (02015) and raises target price to HK$155

CICC releases research report stating they maintain a "outperform industry" rating for LI AUTO-W (02015), Non-GAAP based, maintaining 24/25E profit forecasts unchanged, introducing 26E 17.5 billion profit forecast, raising target price to 155 Hong Kong dollars, corresponding to 23x 25E P/E. It is reported that the company has released the first pure electric SUV i8 image, the i8 has significant exterior changes, initially easing stock price suppression factors. CICC's main points are as follows: Don't be pessimistic about the pure electric business Previously, market divergence in the pure electric business mainly focused on appearance and power supplementation. The i8 debut appearance showed significant changes compared to MEGA, alleviating market pessimism; the bank judges that the i8 will be released around mid-year, and there may be more positive information about the model in the near future. After MEGA was listed, sales were lower than expected. In the past year, based on the original pure electric accumulation, the company further enhanced the charging network; Ideal ultra-charging stations have been built with 1862, and the layout in January-February accelerated. The bank expects that by mid-year when the model is launched, 3-4 thousand ultra-charging stations can be built, surpassing Tesla China's charging network density, alleviating consumer anxiety about charging. The high-end pure electric market landscape is uncertain, and the company's improved product strength is expected to boost market share. The bank calculates that the hybrid business can maintain steady growth Previously, market divergence mainly focused on whether the extended range sales and profits can be maintained. In terms of total sales, the penetration rate of hybrids above 200,000 yuan in 2024 is only 16% (compared to 36% for pure electric), there is still significant room for growth, and the bank expects that the growth rate of hybrids above 200,000 yuan can still exceed the average growth rate of the new energy market. In terms of competition, the company has also faced challenges from other extended range models in the past, but after the company supplemented its intelligence driving, the advantages of bucket-car models were established, and the differentiation in market share is not obvious. Ideal still maintains the top two shares in each interval above 200,000 yuan; At the same time, the release schedule of other extended range competitors is relatively late, making it difficult to have a strong impact on the company's extended range models by 2025. In terms of profitability, intensified competition may lead to a trade-off between price and volume or may be unavoidable, but the bank is optimistic about the positive contribution of economies of scale and supplier rebates to profitability. Overall, the bank believes that the extended range business as the company's base business has the potential to maintain steady growth in profits. Optimistic about the broad logic deduction of the leading intelligent driving car company The company recently pushed OTA7.0, implemented end-to-end push in all scenarios, enhanced marketing promotion, optimized consumer experience through intelligent driving decision-making logic visualization; the company's cash flow and computing power reserves are among the forefront of comparable car companies; At the same time, the bank judges that existing Pro models are expected to be equipped with laser radar, achieving urban NOA functionality as standard, overall, the bank believes that the company's intelligent driving capabilities are at the forefront of the market. In addition, the bank is more optimistic about the company's broad AI layout, on the one hand, the company has recently been strategic in being ALL IN AI, CEO Li Xiang has repeatedly emphasized in interviews the company's investment and leading advantage in the base model. On the other hand, the company's intelligent driving base model adopts an end-to-end+VLM architecture and mentioned it will evolve to VLA architecture, similar to Figure's recently officially released self-developed end-to-end VLA general-purpose intelligent model Helix technology path, the bank is optimistic about the company's performance in comprehensive AI capabilities and valuation improvement opportunities. Risk warning: Electric vehicle sales are lower than expected, intelligent progress is slower than expected.