SHARES of Chinese electric vehicle (EV) maker Li Auto have more than doubled from last year’s low and are tipped for further gains even as a slowing economy and price war hamper its rivals.

The Beijing-based automaker unexpectedly reported profits for the past two quarters by churning out a regular lineup of new models and keeping costs contained. Analysts remain bullish: Citigroup predicts the firm’s shares will climb another 88 per cent by year-end, while Morgan Stanley raised its target price by more than 40 per cent this month.

Li Auto has outpaced its peers by introducing a new model in each quarter since the middle of last year, a much faster pace than competitors such as XPeng and Nio. The revamped product lineup helped revenue surge by 96 per cent last quarter, while deliveries jump to a record 52,584.

“The order intake has been much stronger than the market had expected, thanks partly to the intensive model launches,” said Joanna Chen, an analyst at Bloomberg Intelligence in Hong Kong. “Li Auto’s sales volume will continue to beat XPeng and Nio this year, as the latter are still in a phase of product switch.”

Li Auto’s Hong Kong-listed shares closed at HK$110.80 on Monday (May 29), having climbed from last year’s low of HK$53.55 set on Oct 31. Their 107 per cent rally over the period compares with a 20 per cent gain in Xpeng, and 21 per cent loss for Nio.

A price war is heating up in China’s EV industry as the costs of batteries fall from last year’s highs. Tesla and BYD have both announced plans to cut vehicle prices, effectively squeezing industry margins, though analysts see Li Auto ideally positioned to weather the intensifying competition.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The price wars are mainly in the mass-market segment around a selling price of 100,000 yuan (S$19,089) to 150,000 yuan, “but Li Auto is selling cars far above that range”, said Vincent Sun, an analyst at Morningstar Asia in Singapore. “Secondly, if you look across the board, there are actually not too many models to choose in mid-to-large-sized premium SUVs.”

Unlike its rivals, Li Auto has focused on designing and manufacturing extended-range electric cars, vehicles that use petrol engines to add to the distance possible for their electric motors. The company is also expected to introduce its first purely electric-powered vehicle later this year to complement its existing range of hybrid cars.

Sales momentum

Citigroup sees Li Auto’s shares climbing to HK$208.80 by Christmas due to its sustained sales momentum and improving economies of scale. The firm’s “business model and sales logic are totally different from other new energy vehicle players”, analysts at the bank wrote in a research note published this month.

Analysts have raised their 12-month target price for the automaker by about 10 per cent over the past month alone, the largest increase among the 30 members of the Hang Seng Tech Index, according to data compiled by Bloomberg.

“Two profitable quarters in a row, quality execution in model launches, and cost control, underpin a more favourable volume and margin outlook,” Morgan Stanley analysts including Tim Hsiao in Hong Kong wrote in a note this month, in which they raised their target price by 41 per cent. “The company deserves more credit for its well-rounded strategy and quality execution.” BLOOMBERG