Key Takeaways:
Goldman Sachs cut its Li Auto price target to HKD55 from HKD61, keeping a Neutral rating after third-quarter guidance missed market expectations.
The third-quarter sales guidance implies flat sequential performance, with quarterly deliveries having held near 100,000 vehicles since the first quarter of 2025, Goldman Sachs said in a research note.
Management lowered its long-term gross margin guidance to 15%-20% from above 20% on cost pressures. Goldman now expects 2026 revenue to fall 4% year on year, narrowing from a 22% decline in 2025, with full-year deliveries of about 412,000 vehicles, up 1% and below the prior 20% growth target. The broker revised its 2026 net loss forecast to RMB3.8 billion from RMB4.7 billion, and cut 2027-2028 estimates from profits of RMB500 million and RMB4.9 billion to a loss of RMB300 million and a profit of RMB4 billion.
Li Auto shares fell 1.3% on the day. The downgrade follows a second quarter in which the company posted a net loss of CN¥1.7 billion (US$251.3 million) as deliveries fell 11.5% year on year to 98,330 vehicles, with vehicle margin compressing to 9.4% from 19.4%.
The company guided third-quarter deliveries of 95,000 to 100,000 vehicles, representing year-on-year growth of 1.9% to 7.3%, and revenue of CN¥26.6 billion to CN¥28.0 billion. Management called 2026 a transition year for products, compounded by intensifying competition, and said it will launch dedicated models for each RMB100,000 price segment from next year.
CICC also cut its Li Auto target price by 15% to HKD68 and lowered earnings forecasts after the interim results slightly missed estimates.
Second-quarter revenue fell 15.1% year on year to CN¥25.7 billion, while gross margin narrowed to 11.0% from 20.1%. The company attributed the deterioration to a different product mix during a major model refresh cycle. Cash and cash equivalents stood at CN¥87.5 billion (US$12.9 billion) as of June 30, and Li Auto has repurchased about 91.7 million Class A shares for roughly US$631.5 million under a US$1.0 billion buyback announced in March.
The margin downgrade and flat volume guidance point to a softer demand outlook for the Chinese EV maker as competition intensifies. Investors will watch whether the refreshed L6 and Li i9 models lift deliveries in the fourth quarter, when the company needs roughly 196,500 to 201,500 vehicles to reach its 490,000-unit full-year target.
This article is for informational purposes only and does not constitute investment advice.
