Top Chinese stocks to watch this week: PDD, Li Auto, Ehang

This week's focus is on Chinese equities as EHang (EH), PDD Holdings (PDD), and Li Auto (LI) are set to release earnings. EHang, an eVTOL leader, aims to build on its recent 190% revenue jump, while PDD's results will clarify Temu's growth amid potential changes to de minimis policies. Li Auto's report is expected to show a slight revenue dip in Q1 before resuming growth, with analysts remaining bullish on the EV maker's stock.

Analysis

This week presents significant catalysts for key Chinese equities, with EHang (EH), PDD Holdings (PDD), and Li Auto (LI) scheduled to report financial results, alongside NVIDIA whose earnings will influence broader tech sentiment. EHang Holdings, an eVTOL manufacturer, will release figures after its stock has declined over 43% from its 2024 peak. The company previously reported a 190% revenue surge in Q4 and 288% for the full year, delivering 216 units in 2023 and achieving non-GAAP profitability. Its Q4 revenue reached $22.5 million with a net loss of $6.4 million, but management anticipates reaching breakeven this year, supported by a first-mover advantage in China, international expansion (Japan, Thailand, Mexico), and a backlog exceeding 1,200 aircraft. PDD Holdings' results are anticipated to provide clarity on Temu's U.S. performance and the potential impact from changes to the de minimis rule. PDD's Q4 revenue grew 24% to $15.15 billion, with operating profit up 14% to $3.5 billion, while annual revenue increased 59% to $27 billion. The company maintains a strong financial position with over $56 billion in current assets. Analysts project PDD's revenue to rise 18.7% to 103.1 billion CNY with an EPS of CNY 18.96. Li Auto, an EV manufacturer, will report after its stock rallied over 50% from its annual low. Analysts expect a slight Q1 revenue dip to CNY 25 billion and an EPS decline to CNY 0.64 from CNY 1.21, but project a return to growth with annual revenue forecasted at CNY 169 billion, a 17.2% year-over-year increase. Li Auto's April deliveries rose 31% year-over-year to 33,939 vehicles, following 36,674 in March, and analysts maintain a bullish stance with an average price target of $33.77.

Key Decisions for Investors

• Investors should scrutinize EHang's progress towards its breakeven target, execution on its substantial aircraft backlog, and traction in new international markets, given its unique market position and recent share price volatility.
• For PDD Holdings, focus should be on Temu's growth sustainability, particularly in light of potential U.S. de minimis policy changes, and how these factors reconcile with its strong historical revenue growth and robust balance sheet.
• Li Auto investors should assess if Q1 results align with the anticipated temporary slowdown before a projected growth resumption, and monitor upcoming delivery data to validate sustained demand, especially considering the recent stock appreciation and positive analyst outlook.
• Consider the broader market impact of NVIDIA's earnings, as strong or weak results could influence sentiment towards growth-focused technology stocks, including these Chinese names.