Morgan Stanley: LI AUTO (02015) Downgrades Second Quarter Guidance as Expected, Stock Performance Depends on i8 Launch.

Morgan Stanley released a research report stating that LI AUTO-W (02015) recently lowered its second quarter delivery guidance from 123,000-128,000 units to 108,000 units. This means that the delivery volume in June was 332,000 units, a 30% decrease year-on-year. Therefore, Morgan Stanley believes that the guidance downgrade largely reflects the poor performance of Li-H in the past three weeks. Morgan Stanley points out that the latest second quarter guidance is lower than the bank's expectations due to adjustments in the sales system, resulting in some hiccups in the delivery of the L series. The bank believes that the stock price performance will largely depend on Ideal Car's remedial measures to boost L series sales, and to a greater extent, on the successful listing of the i8 in July. Morgan Stanley expects consumer sentiment to remain subdued after XIAOMI-W (01810) launches the YU7 and before the debut of the i series by Ideal Car. Additionally, the off-peak season and the suspension of local subsidies may squeeze short-term orders. However, Morgan Stanley believes that the impact of these factors should be temporary, and order momentum should gradually recover. Morgan Stanley stated that its optimistic outlook for the second half of the year remains unchanged. The sluggish sales in June did not disrupt expectations for a recovery in operations in the second half of the year, and the arrival of new models will lay the foundation for performance recovery in the second half of the year. Despite the expected downward revision, Ideal Car's team's high-quality execution, the lessons learned from the launch of the Mega series last year, and potentially more competitive pricing could bring surprises for the upcoming i8.