Goldman Sachs: Ideal Auto (02015) reduces target price to HK$55 below market expectations

The Zhitong Finance App learned that Goldman Sachs released a research report stating that it will lower the target price of Ideal Auto (02015) from HK$61 to HK$55, maintaining a “neutral” rating.

Ideal Auto's second-quarter results and third-quarter guidance are generally in line with the bank's forecasts, but are lower than market expectations. The third-quarter sales guidance means that the sales volume for the third quarter has remained flat quarterly, and the company's quarterly sales volume has remained at the level of about 100,000 vehicles since the first quarter of last year. Management explained that this year is a product transition year, compounding the effects of increased market competition, and predicts that specific products will be launched for each 100,000 yuan price range starting next year.

Management lowered the long-term gross margin guideline from 20% or more to 15% to 20%, mainly due to cost pressure. Goldman Sachs expects Ideal Auto's revenue for the full year of 2026 to fall 4% year on year, narrowing by 22% year on year; due to the increase in the share of L6/i6, annual sales volume is expected to reach about 412,000 units, up 1% year over year, lower than the previous 20% year on year increase; and average sales price will drop 7% year on year. Driven by increased competition and rising raw material costs, Goldman Sachs expects gross margin to drop to 12.2% this year, compared to 18.7% in 2025. The bank adjusted the Group's net loss forecast for 2026 from RMB 4.7 billion to RMB 3.8 billion, and lowered the 2027-2028 forecast from profit of RMB 500 million and profit of RMB 4.9 billion to loss of RMB 300 million and profit of RMB 4 billion.