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Li Auto (2015): 2025 will be a severe challenge for Li Auto. Total revenue for the year is expected to be approximately RMB 112.3 billion, a year-on-year decrease of 22.3%; net profit plummeted by 85.8% to only RMB 1.14 billion. Due to declining vehicle deliveries, operating performance turned from profit to loss, recording an operating loss of RMB 521 million. Overall gross margin was also affected by changes in the product mix, decreasing from 20.5% to 18.7%. Looking ahead to 2026, Li Auto will focus on its internationalization strategy, aiming to enter the Middle East and Southeast Asian markets, with overseas sales expected to account for 3-4% of total sales. Despite its strong technological reserves, market analysts generally hold a cautious attitude. Affected by fluctuations in battery costs and the need to clear inventory for new models, the vehicle gross margin in the first quarter of 2026 is expected to fall to around 5%. Given the highly overlapping product lines of competitors and the lack of groundbreaking new models, the company still faces the potential risk of continued profit narrowing or even a shift from profit to loss this year.
China's credit sector is strong for enterprises but weak for households
The People's Bank of China released social financing data for February. While the data met market expectations, considering the impact of the Chinese New Year holiday, the combined data for the first two months showed a significant decrease in household loans compared to the same period last year, mainly due to a weaker increase in medium- and long-term loans. As for corporate loans, the total increase was similar to the same period last year, but the change was in their financing channels, shifting from bill financing to short-term loans, indicating no deterioration in corporate borrowing willingness.
On Friday, net inflows into Hong Kong stocks via the Stock Connect program totaled HK$18.448 billion. The Tracker Fund of Hong Kong (02800) saw the largest inflow at HK$7.98 billion, followed by the Hang Seng China Enterprises Fund (02828). Hua Hong Semiconductor (01347) recorded the largest net outflow at HK$242 million, followed by SMIC (00981).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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