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Research Alert: CFRA Downgrades Opinion On Shares On Li Auto Inc. To Sell From Hold
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Research Alert: CFRA Downgrades Opinion On Shares On Li Auto Inc. To Sell From Hold
May 20, 2024 10:12 AM

12:45 PM EDT, 05/20/2024 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We cut our 12-month target price to USD18 from USD50. The valuation reflects a 2024 P/B of 2x, a discount to Li Auto's ( LI ) 2020-2023 average P/B of 4x to price in weakness in its profit margin. Li Auto ( LI ) posted a net profit of CNY591 million in Q1 2024 on a 32% expansion in revenue, vs. a net profit of CNY934 million in Q1 2023. We believe revenue growth will remain at more than 70% in 2024-2025 on new model releases. We are neutral on Li Auto's ( LI ) fundamentals mostly due to the fierce competition in China's EV market, which limits average selling price gains while keeping research and development and marketing expenses high, especially as Li Auto ( LI ) embarks on a multiple product strategy in 2024. Hence, we remain cautious on Li Auto's ( LI ) profitability momentum and revise our opinion to a Sell rating. We now project 2024 EPS of CNY12.77 from CNY14.30 and 2025 EPS of CNY17.19 from CNY19.90.

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