Chinese electric vehicle (EV) giants Li Auto, Inc. (HK:2015) and BYD Co. Limited (HK:1211) continue to face intense competition amid the ongoing price wars in the sector, which is weighing on their profits. However, analysts expect EV demand to remain resilient amid the ongoing macro challenges. With this backdrop, we have used the TipRanks’ Stocks Comparison tool for the Hong Kong market to compare Li Auto and BYD to find out the best fit for investors moving forward in 2024.
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Year-to-date, BYD shares have lost 4.3%, while Li Auto has traded down by 30%.
Let’s take a look at these two stocks in detail.
BYD Co. Limited
BYD ended 2023 on a high note, achieving a record-breaking sales volume of 3 million globally. This marked an increase of 62% over the previous year. On the flip side, the company’s multiple price cuts to capture higher market shares impacted its profitability. In Q4, the company disclosed a net profit of ¥8.67 billion, reflecting an 18.6% increase compared to the previous year but a 16.7% decline from the third quarter.
In 2024, BYD announced a 43% decline in sales for the first quarter of 2024, compared to the previous quarter, losing its top spot as the world’s largest EV seller to Tesla (NASDAQ:TSLA). However, analysts believe that despite the short-term challenges and volatility in the share price, BYD’s long-term growth prospects remain intact.
DBS anticipates a roughly 30% increase in BYD’s vehicle sales in 2024, driven by integrated production methods and a growing portfolio of new energy vehicles. For the full year 2024, the company has reportedly kept a global sales target of 3.6 million units, which is 20% above the 2023 level.
Is BYD a Good Stock to Buy Now?
According to TipRanks, 1211 stock has received a Moderate Buy consensus rating based on nine Buys, one Hold, and one Sell recommendation. The BYD Co. share price target is HK$263.45, which implies an upside of 31% from the current trading level.
Li Auto, Inc.
Chinese EV maker Li Auto sold 376,030 units in 2023, marking a notable surge of 182.2% compared to 133,246 vehicles in 2022. So far in 2024, the company is experiencing lower-than-anticipated order intake, largely attributed to negative reviews of the styling of its electric Mega MPV.
As a result, the company has revised its guidance range for the first quarter and full year of 2024. Li Auto now anticipates sales to range between 560,000 and 640,000 units for 2024, a reduction from the previous forecast of 650,000 to 800,000 units.
Recently, Li Auto unveiled its newest offering, the L6 SUV, priced competitively below Tesla’s renowned Model Y. Analyst Edison Yu from Deutsche Bank anticipates a robust order backlog for Li Auto with the introduction of the L6, despite increased competition in the market. The company is targeting monthly sales of 30,000 units for L6.
Is Li Auto Inc. a Good Investment?
On TipRanks, 2015 stock has been assigned a Strong Buy consensus rating, backed by Buy recommendations from all six analysts covering the stock. The Li Auto share price target is HK$194.72, which is 83% above the current price level.
Conclusion
Overall, analysts have a highly bullish outlook on Li Auto stock and a cautiously optimistic stance on BYD. They forecast a higher upside potential in Li Auto stock than BYD shares. The recent launch of the L6 is expected to drive higher sales for the company.
As for BYD, analysts still believe the company is well-positioned to capitalize on its brand strength, diverse range of models, and global presence.
