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joined discussion · Mar 13 13:41

Li Auto's Q4 net profit plummeted by 99%. Why is Daiwa still bold enough to call it a 'buy'?

On March 12, $Li Auto (LI.US)$ The released 2025 financial report likely left many Hong Kong and US stock investors stunned: Q4 net profit attributable to common shareholders was only RMB 20.2 million, a staggering year-on-year drop of 99.4%—last year they earned RMB 3.5 billion, but this year there’s almost nothing left; the full-year net profit also fell by 85.8%, leaving only RMB 1.139 billion. Even more disheartening, the revenue guidance for Q1 2026 is only between RMB 20.4-21.6 billion, significantly lower than Bloomberg's consensus estimate of RMB 24.01 billion, causing pre-market trading in the US to drop nearly 3% immediately. On March 13, Hong Kong stocks $LI AUTO-W (02015.HK)$ opened lower and continued to decline. As of press time, the drop was 2.92%, trading at HKD 68.1 per share. However, amidst widespread market pessimism, Daiwa’s research report unexpectedly gave Li Auto a “buy” rating, stating that “efficiency will improve after strategic adjustments.” This move in the investment circle is akin to shouting “buy the dip” on a limit-down day—is it that the institutions have gone mad, or are we missing key signals in the earnings report? The truth behind the earnings collapse: Not a meltdown, but growing pains from a strategic transition The financial report shows that in 2025, Li Auto achieved revenue of RMB 112.312 billion, down 22.3% year-on-year; net profit was RMB 1.139 billion, down 85.8% year-on-year; overall gross margin narrowed from 20.5% in 2024 to 18.7%. 2025 can be called the year of strategic growing pains for Li Auto. With core range expansion...
On March 12, $Li Auto (LI.US)$ The released 2025 financial report likely left many Hong Kong and US stock investors stunned: Q4 net profit attributable to common shareholders was only RMB 20.2 million, a staggering year-on-year drop of 99.4%—last year they earned RMB 3.5 billion, but this year there’s almost nothing left; the full-year net profit also fell by 85.8%, leaving only RMB 1.139 billion. Even more disheartening, the revenue guidance for Q1 2026 is only between RMB 20.4-21.6 billion, significantly lower than Bloomberg's consensus estimate of RMB 24.01 billion, causing pre-market trading in the US to drop nearly 3% immediately.
On March 13, Hong Kong stocks $LI AUTO-W (02015.HK)$ opened lower and continued to decline. As of the time of writing, the drop was 2.92%, trading at HKD 68.1 per share.
However, amid widespread market pessimism, Daiwa's research report unexpectedly gave Li Auto a 'buy' rating, stating that 'efficiency will improve after strategic adjustments.' This is akin to shouting 'bottom fishing' on a limit-down board in the investment circle — has the institution gone mad, or are we missing critical signals in the earnings report?
The truth behind the earnings plunge: not a collapse, but growing pains from a transition
On March 12, $Li Auto (LI.US)$ The released 2025 financial report likely left many Hong Kong and US stock investors stunned: Q4 net profit attributable to common shareholders was only RMB 20.2 million, a staggering year-on-year drop of 99.4%—last year they earned RMB 3.5 billion, but this year there’s almost nothing left; the full-year net profit also fell by 85.8%, leaving only RMB 1.139 billion. Even more disheartening, the revenue guidance for Q1 2026 is only between RMB 20.4-21.6 billion, significantly lower than Bloomberg's consensus estimate of RMB 24.01 billion, causing pre-market trading in the US to drop nearly 3% immediately. On March 13, Hong Kong stocks $LI AUTO-W (02015.HK)$ opened lower and continued to decline. As of press time, the drop was 2.92%, trading at HKD 68.1 per share. However, amidst widespread market pessimism, Daiwa’s research report unexpectedly gave Li Auto a “buy” rating, stating that “efficiency will improve after strategic adjustments.” This move in the investment circle is akin to shouting “buy the dip” on a limit-down day—is it that the institutions have gone mad, or are we missing key signals in the earnings report? The truth behind the earnings collapse: Not a meltdown, but growing pains from a strategic transition The financial report shows that in 2025, Li Auto achieved revenue of RMB 112.312 billion, down 22.3% year-on-year; net profit was RMB 1.139 billion, down 85.8% year-on-year; overall gross margin narrowed from 20.5% in 2024 to 18.7%. 2025 can be called the year of strategic growing pains for Li Auto. With core range expansion...
The financial report shows that in 2025, Li Auto achieved revenue of RMB 112.312 billion, a year-on-year decrease of 22.3%; net profit was RMB 1.139 billion, a year-on-year drop of 85.8%; overall gross margin narrowed from 20.5% in 2024 to 18.7%.
2025 is a year of strategic growing pains for Li Auto. As the core extended-range track's dividends gradually faded and the shift to all-electric vehicles faced challenges, the company’s development rhythm was notably disrupted, leading to a significant decline in sales. Li Auto delivered 406,300 vehicles throughout the year, a year-on-year decrease of 18.81%; corresponding vehicle sales revenue was RMB 106.683 billion, a year-on-year reduction of 23.0%; vehicle gross margin fell from 19.8% in the previous year to 17.9%.
In addition, adjustments to the product mix, fluctuations in upstream raw material prices, and promotional pricing strategies adopted to address market competition further intensified the company's profitability pressures. Multiple factors compounded to cause a full-year financial debacle.
On March 12, $Li Auto (LI.US)$ The released 2025 financial report likely left many Hong Kong and US stock investors stunned: Q4 net profit attributable to common shareholders was only RMB 20.2 million, a staggering year-on-year drop of 99.4%—last year they earned RMB 3.5 billion, but this year there’s almost nothing left; the full-year net profit also fell by 85.8%, leaving only RMB 1.139 billion. Even more disheartening, the revenue guidance for Q1 2026 is only between RMB 20.4-21.6 billion, significantly lower than Bloomberg's consensus estimate of RMB 24.01 billion, causing pre-market trading in the US to drop nearly 3% immediately. On March 13, Hong Kong stocks $LI AUTO-W (02015.HK)$ opened lower and continued to decline. As of press time, the drop was 2.92%, trading at HKD 68.1 per share. However, amidst widespread market pessimism, Daiwa’s research report unexpectedly gave Li Auto a “buy” rating, stating that “efficiency will improve after strategic adjustments.” This move in the investment circle is akin to shouting “buy the dip” on a limit-down day—is it that the institutions have gone mad, or are we missing key signals in the earnings report? The truth behind the earnings collapse: Not a meltdown, but growing pains from a strategic transition The financial report shows that in 2025, Li Auto achieved revenue of RMB 112.312 billion, down 22.3% year-on-year; net profit was RMB 1.139 billion, down 85.8% year-on-year; overall gross margin narrowed from 20.5% in 2024 to 18.7%. 2025 can be called the year of strategic growing pains for Li Auto. With core range expansion...
Looking at individual quarters, although Li Auto’s Q4 performance showed a slight sequential recovery, it still exhibited a significant year-on-year decline, failing to reverse the downward trend of the full-year results.
Specifically, in Q4, Li Auto reported revenue of RMB 28.775 billion, a year-on-year decrease of 35.0%; net profit was RMB 20.2 million, but plummeted by 99.4% year-on-year; overall gross margin improved to 17.8%, but still decreased by 2.5 percentage points year-on-year.
The financial report pointed out that the year-on-year decline in gross margin was mainly dragged down by different product mixes, particularly as deliveries of the Li Auto L6 model began, which lowered the overall average selling price.
The confidence behind institutions shouting 'buy' is a bet on 'a rebound after strategic adjustments'
On March 12, $Li Auto (LI.US)$ The released 2025 financial report likely left many Hong Kong and US stock investors stunned: Q4 net profit attributable to common shareholders was only RMB 20.2 million, a staggering year-on-year drop of 99.4%—last year they earned RMB 3.5 billion, but this year there’s almost nothing left; the full-year net profit also fell by 85.8%, leaving only RMB 1.139 billion. Even more disheartening, the revenue guidance for Q1 2026 is only between RMB 20.4-21.6 billion, significantly lower than Bloomberg's consensus estimate of RMB 24.01 billion, causing pre-market trading in the US to drop nearly 3% immediately. On March 13, Hong Kong stocks $LI AUTO-W (02015.HK)$ opened lower and continued to decline. As of press time, the drop was 2.92%, trading at HKD 68.1 per share. However, amidst widespread market pessimism, Daiwa’s research report unexpectedly gave Li Auto a “buy” rating, stating that “efficiency will improve after strategic adjustments.” This move in the investment circle is akin to shouting “buy the dip” on a limit-down day—is it that the institutions have gone mad, or are we missing key signals in the earnings report? The truth behind the earnings collapse: Not a meltdown, but growing pains from a strategic transition The financial report shows that in 2025, Li Auto achieved revenue of RMB 112.312 billion, down 22.3% year-on-year; net profit was RMB 1.139 billion, down 85.8% year-on-year; overall gross margin narrowed from 20.5% in 2024 to 18.7%. 2025 can be called the year of strategic growing pains for Li Auto. With core range expansion...
Looking ahead to the first quarter of 2026, Li Auto’s provided earnings guidance remains relatively conservative, with pressure likely to continue.
The company expects vehicle deliveries in the first quarter to be between 85,000 and 90,000 units, representing a year-over-year decrease of 3.1% to 8.5%; total revenue is projected to be between RMB 20.4 billion and RMB 21.6 billion, reflecting a year-over-year decline of 16.7% to 21.3%.
Facing challenges, Li Xiang, Chairman and Chief Executive Officer of Li Auto, stated in the announcement that 2026 will be an important product cycle year for the company. The all-new Li L9, launching in the second quarter, will feature comprehensive upgrades in the powertrain, autonomous driving, and chassis technology, delivering a generational leap in user experience. Meanwhile, Li Auto will continue to refine its R&D system tailored for AI-driven innovation, maintaining steady investment in research to drive long-term product innovation and technological breakthroughs.
In fact, institutional analysts had anticipated the earnings pressure facing Li Auto and generally hold a cautious view of its future performance.
Just before the earnings release, JPMorgan issued a research report stating,due to downside potential in market profit forecasts for Li Auto,，its stock price may face significant downward pressure.。
A CMB International report noted that the revamped L9 and the all-new i9 are key models this year. As the first new model launched by Li Auto this year, the success or failure of the L9 could set the tone for the next generation of L8/L7 models. Investors are advised to wait for more details; it is still too early to determine whether the L9 can stand out in China’s fiercely competitive large SUV market, especially as advancements in fast-charging technology could erode the overall market share of range-extended vehicles. The firm expectsLi Auto may record a net loss in the first half of 2026, and its transformation into an embodied intelligence company still needs to be tested by the market.。
Daiwa Research holds a relatively optimistic view. The brokerage noted that Li Auto's weak performance in Q4 2025 was primarily due to a decline in deliveries and increased R&D expenditures. Revenue for the period was RMB 28.8 billion, down 35% year-over-year but up 5% quarter-over-quarter. Adjusted non-GAAP net profit was RMB 261 million, plummeting 94% year-over-year and dropping 172% quarter-over-quarter. For the full year, revenue fell 22% year-over-year to RMB 112 billion, while adjusted non-GAAP net profit dropped 78% year-over-year to RMB 2.4 billion. Management expects deliveries in Q1 2026 to be between 85,000 and 90,000 units, representing a year-over-year decrease of 3% to 8.5%. Total revenue for Q1 is projected to be between RMB 20.4 billion and RMB 21.6 billion, down 17% to 21% year-over-year. The target is for over 20% year-over-year sales growth in 2026.The brokerage has assigned a 'Buy' rating to Li Auto, expecting that the company’s strategy adjustments last year will enhance efficiency. However, the brokerage believes it will still take time for the company to seize the growth opportunities presented by embodied artificial intelligence.
Author: Pingzi
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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