休息一下的时间

Time to take a breather Downgrade to HOLD.We think that Li Auto may lack positive catalysts in thenext few months, as it faces both sales and GPM challenges.Meanwhile, LiAuto has been undergoing a transformation to focus more on AI-relateddevices, which may take a while to monetize. We suggest investors watch itsnew-generation L-series next year closely and whether the current margin dent China Auto 3Q25 earnings excluding one-off costs largely in line.Li Auto’s 3Q25revenue was about 2% higher than our prior forecast.GPM in 3Q25narrowed by 3.7ppts QoQ to 16.3%, dragged by one-off costs of aboutRMB1.1bn related to theMegarecall. 3Q25 GPM would have been 20.4%,or 1ppt higher than our prior forecast without the recall costs. Operatinglosswithoutthe recall costs of RMB76mnwas in line with our projected Lack of positive catalysts in the next few months.Although we stillbelieve Li Auto is anoutstanding company which may make anothercomebackpost the Mega launch incident, especially with the recentorganizational restructuring, we expect the automaker to face both salesvolume and GPM challenges in 4Q25 and 1Q26.Management guided a Margin dent may persist, which makes valuation unattractive.Weareof the view that Li Auto’smargin declinesin 4Q25-1Q26may not be short-lived, asitmay have to lower pricesfortheredesigned L-seriesto push forhigher sales volume amid stiffer competition in China,especially forEREVs.We project FY26E sales volume of 0.5mn units with GPM of17.0%. That would result in a net profit of RMB3.4bn in FY26E on our Valuation/Key risks.We downgrade ourADS/H-shareratingsto HOLDfrom Buy and cut ourtarget prices from US$28/HK$109 to US$18/HK$70,which now corresponds to 40xFY26E P/E and 18x FY27E P/E. We believesuchvaluation premium has already priced in Li Auto’s leadingtechnologies in autonomous driving.Key risks to our rating and target price Source: FactSet Disclosures& Disclaimers Analyst Certification The research analyst who is primary responsible for the content of this research report, in whole or in part,certifies that with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensationwas, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong KongSecurities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3) serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGMRatings BUY: Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 months Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852)3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important Disclosures There are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guaranteed and may fluctuate as a result of their dependence on the or its affiliate(s) to whom it is distributed. This report is not and should not be construed as an offer or solicitation tobuy or sell any security or any interest insecurities or enter into any transaction.NeitherCMBIGMnor any of its affiliates, shareholders, agents, consultants, directors, officers or employees shall beliable for any loss, damage or expense whatsoever, whether direct or consequential, incurred in relying on the information contained in this report.Anyonemaking