HSBC: Ideal Motors may incur losses in the first quarter, due to a decrease in sales and rising costs.

HSBC analysts stated in a report that after a weak performance in the fourth quarter, Ideal Auto's net profit in the first quarter may be under pressure. Yuqian Ding and Li Yang predict that due to seasonal sales decline, destocking discounts, and rising input costs, Ideal Auto is expected to incur a net loss of 1.9 billion yuan in the first quarter. They mentioned that although the Chinese automaker's American Depositary Receipts have been relatively stable so far this year, indicating that short-term negative factors have largely been digested by the market, the possibility of achieving a significant recovery in sales in the first half of the year may be limited. They pointed out that the new model L9 and other updated models in the L series could be crucial for sales momentum in 2026. HSBC significantly reduced its profit forecast for Ideal Auto in 2026 and 2027 by 70% and 26% respectively based on lower income assumptions, citing weak sales outlook and margin pressure. The bank maintained a hold rating on Ideal Auto and lowered its target price from $18.60 to $17.20. The latest closing price of the ADR was $17.13.