Li Auto Inc. (LI US) Company Update Summary
Core Content
This report from CMB International Global Markets provides an equity research update on Li Auto Inc. (LI US), highlighting its financial performance, earnings guidance, and future outlook. The report maintains a BUY rating and sets a target price of US$48.00, with a potential upside of +47.7% from the current price of US$32.49.
Main Points
Financial Performance
- 2Q22 Earnings: Li Auto reported a net loss of RMB 641 million, which was in line with the forecast range of RMB 500–800 million.
- Gross Margin: Exceeded expectations at 21.5%, beating the prior estimate of 19–20%.
- Cost of Goods Sold: Increased by RMB 5,500 per vehicle, but the company managed to absorb part of the battery cost hikes.
- Revenue Growth: Sequential revenue growth in 2Q22, with a YoY growth of 81.1% for FY22E.
Earnings Guidance
- 3Q22 Transition Period: Expected narrowing net loss due to the ramp-up of the L9 and the anticipation of the L8 launch.
- Sales and Delivery Guidance: Sales guidance of 27,000–29,000 units and delivery target of 10,000 units for the L9 in September 2022.
- 4Q22 Outlook: Anticipated sustainable net profit due to the L9 production ramp-up, with L8 expected to launch in Oct–Nov 2022.
Revenue and Profit Forecasts
- Revised Revenue Forecasts: Raised FY22E–24E revenue forecasts by 1–2%.
- FY22E Sales Volume: Cut by 10,000 units to 145,000 units.
- L9 Sales Forecast: Increased to 40,000 units from 25,000 units.
- Profitability Outlook: Net profit is expected to turn positive in FY23E, with EPS reaching RMB 1.10 by the end of 2023.
Valuation
- P/S Ratio: Reduced to 3.3x for FY23E, reflecting a more challenging industry landscape.
- Valuation Risks: Include slower autonomous driving development and lower-than-expected sales volume.
Key Financial Metrics
Earnings Summary
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Revenue (RMB mn) |
9,457 |
27,010 |
48,903 |
91,831 |
144,577 |
| YoY growth (%) |
3,225.5 |
185.6 |
81.1 |
87.8 |
57.4 |
| Net income (RMB mn) |
(792) |
(321) |
(485) |
983 |
2,163 |
| EPS (RMB) |
(0.91) |
(0.17) |
(0.25) |
0.50 |
1.10 |
| P/S (x) |
9.9 |
7.2 |
4.1 |
2.2 |
1.4 |
| ROE (%) |
(6.6) |
(0.9) |
(1.2) |
2.3 |
4.9 |
Key Ratios
| Ratio |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Gross margin (%) |
16.4 |
21.3 |
21.9 |
21.2 |
20.7 |
| Net profit margin (%) |
(8.4) |
(1.2) |
(1.0) |
1.1 |
1.5 |
| Current ratio (x) |
7.3 |
4.3 |
2.7 |
1.7 |
1.4 |
| Inventory turnover days |
48 |
28 |
28 |
26 |
26 |
| Payable turnover days |
146 |
161 |
150 |
150 |
130 |
| ROE (%) |
(6.6) |
(0.9) |
(1.2) |
2.3 |
4.9 |
| ROA (%) |
(3.5) |
(0.7) |
(0.7) |
1.2 |
2.2 |
Shareholding and Performance
Shareholding Structure
| Shareholder |
% Ownership |
| Li Xiang |
22.5% |
| Wang Xing |
18.9% |
| Others |
58.6% |
Share Performance
| Period |
Absolute (%) |
Relative (%) |
| 1-mth |
-12.2 |
-32.7 |
| 3-mth |
61.5 |
-30.9 |
| 6-mth |
15.5 |
-20.6 |
Stock Data
| Metric |
Value (US$) |
| Market Cap (mn) |
33,864 |
| Avg 3 mths t/o (mn) |
409 |
| 52w High/Low |
41.49/16.86 |
| Total Issued Shares (mn) |
2,066 |
Key Risks
- Autonomous driving development: May be slower than expected.
- Sales volume: Could be lower than forecast.
- Valuation assumptions: May be affected by the challenging industry environment.
Analyst Certification
The analyst certifies that the views expressed accurately reflect personal opinions and confirms no conflicts of interest in the immediate past or future. CMBIGM has an investment banking relationship with the companies covered in the report.
CMBIGM Ratings
- BUY: Potential return of over 15% over the next 12 months.
- OUTPERFORM: Industry expected to outperform the relevant broad market benchmark over the next 12 months.
Disclaimer
This report is for informational purposes only and is not tailored to individual investors. It is not an offer to buy or sell securities and may not be reproduced without prior written consent. CMBIGM is not a registered broker-dealer in the United States and does not provide investment advice.
