Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>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.</li>
<li>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. </li>
<li>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.</li>
</ul>


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.


[Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question

<ul>
<li>Market underestimates the size of China’s stimulus packages, which consist of Rmb150bn of EV trade-in’s by year end and Rmb3tn worth of industrial equipment upgrades over 5 years;</li>
<li>Consolidation by BYD, LI and Huawei in marketing share shall continue, profitably. Our TOP PICK is BYD.</li>
<li>Consolidation by BYD, LI and Huawei in marketing share shall continue, profitably. Our TOP PICK is BYD.</li>
</ul>


Market underestimates the size of China’s stimulus packages, which consist of Rmb150bn of EV trade-in’s by year end and Rmb3tn worth of industrial equipment upgrades over 5 years;
Consolidation by BYD, LI and Huawei in marketing share shall continue, profitably. Our TOP PICK is BYD.
Consolidation by BYD, LI and Huawei in marketing share shall continue, profitably. Our TOP PICK is BYD.


[Blue Lotus Transportation Sector Update]: Consolidation by BYD, LI and Huawei Continue

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

<ul>
<li>Share price under pressure due to industry challenges and transition of new product line-ups.  </li>
<li>2024 is a blip, things will normalise 2025 and deliver strong topline and bottomline growth. </li>
<li>LiAuto is trading at bargain levels for a company delivering 3-year earnings CAGR of 38%, net cash balance sheet and churns high free cash flow. </li>
</ul>


Share price under pressure due to industry challenges and transition of new product line-ups.  
2024 is a blip, things will normalise 2025 and deliver strong topline and bottomline growth. 
LiAuto is trading at bargain levels for a company delivering 3-year earnings CAGR of 38%, net cash balance sheet and churns high free cash flow. 


LiAuto (LI US, BUY, TP:USD25.0): High Growth + Deep Value Stock

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.</li>
<li>Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.</li>
<li>Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.</li>
</ul>


The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.
Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.
Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.


EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO (NIO US)</a> is a Chinese premium electric vehicle manufacturer listed across three exchanges. </li>
<li>NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in 2026 is likely to be broken.  </li>
<li>NIO’s valuation is stretched as it trades at a material premium to median Chinese EV peers’ EV/Sales and growth-adjusted EV/Sales multiples. </li>
</ul>



NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed across three exchanges. 
NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in 2026 is likely to be broken.  
NIO’s valuation is stretched as it trades at a material premium to median Chinese EV peers’ EV/Sales and growth-adjusted EV/Sales multiples. 


2025 High Conviction: Short NIO (NIO US/9866 HK)

China

Li Auto Inc. manufactures automobiles. The Company designs, develops, and sells smart new energy electric sport utility vehicles. Li Auto conducts businesses in China.

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Li Auto (LI US)

[Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question

LI Auto reported mixed financial results, but market oversold. Key question is next product entry amidst Xiaomi's EV dominance. LI should focus on...

Blue Lotus Research Institute

[Blue Lotus Transportation Sector Update]: Consolidation by BYD, LI and Huawei Continue

China's stimulus packages are larger than expected, with significant investments in EV trade-ins and industrial equipment upgrades. BYD is...

Blue Lotus Research Institute

LiAuto (LI US, BUY, TP:USD25.0): High Growth + Deep Value Stock

LiAuto's share price is trading at bargain levels. 2024 is a blip, but earnings growth will resume 2025 onwards with a 3-year earnings CAGR of 38%...

Mohshin Aziz

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

2025 High Conviction: Short NIO (NIO US/9866 HK)

NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question

​LI Auto reported mixed financial results, but market oversold. Key question is next product entry amidst Xiaomi's EV dominance. LI should focus on...

Blue Lotus Research Institute

[Blue Lotus Transportation Sector Update]: Consolidation by BYD, LI and Huawei Continue

​China's stimulus packages are larger than expected, with significant investments in EV trade-ins and industrial equipment upgrades. BYD is...

Blue Lotus Research Institute

LiAuto (LI US, BUY, TP:USD25.0): High Growth + Deep Value Stock

​LiAuto's share price is trading at bargain levels. 2024 is a blip, but earnings growth will resume 2025 onwards with a 3-year earnings CAGR of 38%...

Mohshin Aziz

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

​Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

2025 High Conviction: Short NIO (NIO US/9866 HK)

NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in...

Arun George

LI Auto reported mixed financial results, but market oversold. Key question is next product entry amidst Xiaomi's EV dominance. LI should focus on...

China's stimulus packages are larger than expected, with significant investments in EV trade-ins and industrial equipment upgrades. BYD is...

LiAuto's share price is trading at bargain levels. 2024 is a blip, but earnings growth will resume 2025 onwards with a 3-year earnings CAGR of 38%...

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...