CICC International: downgrades LI AUTO-W (02015) to "hold" rating with a target price of 70 Hong Kong dollars, expecting a price reduction to boost next year's new generation sales.

Released research report said that Zhongyin International released a research report stating that due to the lack of catalyst in the next few months, LI AUTO-W (02015) was downgraded from "Buy" to "Hold", and the target price was lowered to HKD 70, corresponding to a P/E ratio of 40 and 18 times for 2026-2027. The bank believes that the current valuation premium already reflects the group's leading position in the field of autonomous driving. The report stated that Ideal Automobile's third-quarter performance and operating losses were basically in line with expectations after excluding one-time Mega recall costs, and the gross profit margin remained at a high of about 20.4%. Considering the intense market competition for extended-range vehicle models, the bank believes that Ideal Automobile may need to drive sales of the new generation L series next year through price reductions, so the decline in gross profit margin over the next two quarters may not be a short-term phenomenon. The bank predicts that the group's sales volume in 2026 is expected to return to 500,000 units, but the gross profit margin may narrow to 17%, corresponding to a profit of 3.4 billion RMB.