In today’s briefing:
- [Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question
- LiAuto (LI US, BUY, TP:USD25.0): Good 2Q-2024 Results, on Track to Match Consensus
- Lululemon 2Q’24 Update
- [Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution
[Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question
- LI Auto (LI) reported C2Q24 top line, non-GAAP operating profit and GAAP net income 5.0%, (5.2%) and (20%) vs. our estimates, and in-line, 53% and 6.8% vs. consensus.
- We believe the market has oversold the company.But in our view,the key question is LI’s next product entry under the backdrop of Xiaomi consolidating its position in the EV sector.
- We believe LI should continue to explore its “family car” brand niche in entering the sedan market. If so, volume and margin can co-exist.
LiAuto (LI US, BUY, TP:USD25.0): Good 2Q-2024 Results, on Track to Match Consensus
- 2Q-2024 results is within ours and consensus expectations. Competition is tough, but LiAuto managed to remain profitable
- Management is boosting R&D expenditure and boost spending on expanding number of charging stations, all for the benefit of its customers.
- Our fair value of USD25 implies 16x FY25 PE – average for auto growth stock. A bargain with 3-year CAGR of 38%, net cash, and churns high free cash flow.
Lululemon 2Q’24 Update
- It is far from common for a stock to be up 4% after missing the revenue guide for the quarter and slashing the full-year revenue guide for the year.
- That’s exactly what happened with Lululemon today which should tell you the kind of sentiment going into the earnings!
- The crux of the bear thesis on Lulu usually circles around their US business.
[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution
- Meituan reported C2Q24 revenue 1.4%/2.3% higher than our estimate/consensus and adjusted net income 17%/28% higher than our estimate/consensus, thanks to lower rider cost and less subsidies to users;
- Although poor economy has plunged Meituan’s merchant base to the loss-making zone, we expect Meituan’s take rate to persist as take-out order represents incremental revenue to offset merchants’ fixed cost.
- We reiterate BUY rating and raise TP to HK$165/share. Catalysts are reduced competition, expansion of Pinhaofan, and overseas expansion.