Understanding the market | Li Auto-W drops over 4% again, institutions predict further pressure on Li Auto's profitability in the second quarter

Li Auto-W fell by more than 4%, as of the time of publication, it dropped by 4.01% to HKD 78.9, with a turnover of HKD 4.29 billion. CMB International Securities published a report stating that Li Auto's first-quarter Non-GAAP net profit was RMB 1.28 billion, down by 9.7% and 72.2% year-on-year and quarter-on-quarter, respectively. The overall changes in unit price and gross profit margin are in line with guidance, but high expense investment significantly dragged down performance. Meanwhile, Lyon stated that Li Auto's first-quarter gross profit margin narrowed by 2.9 percentage points quarter-on-quarter, mainly due to offering discounts on older models. With the company reducing prices again in April, the bank expects Li Auto's profitability in the second quarter to come under further pressure. Zheng Securities pointed out that the company is currently in a pressure channel due to factors such as price strategy adjustments, intensified industry competition, and lower-than-expected sales volume. It is expected that by the second quarter of 2024, after further pressure, Li Auto may reach a bottom and rebound. The bank is looking forward to the company's performance after adjusting its pure electric strategy, optimizing organizational structure, and improving operational efficiency. They also mentioned that an increase in the proportion of L6 sales may continue to put pressure on gross profit margin in the second quarter