20220228-招银国际-Solid_4Q21_results__new_model_as_catalyst_4页_928kb

Li Auto Inc. (LI US) Company Update Summary

Core Content

Li Auto Inc. (LI US) reported strong 4Q21 results, particularly in the bottom line, which exceeded expectations. The company's operational efficiency and consumer-focused culture are seen as key strengths in navigating supply chain challenges and industry competition. The upcoming X01 model and progress in autonomous driving (AD) development are highlighted as potential catalysts for the stock's performance.

Main Points

• Financial Performance in 4Q21:

  • Revenue was 2.6% higher than prior estimates.
  • Gross margin (22.4%) was 0.5 ppt wider than expected.
  • Net profit was RMB 275mn higher than estimates, mainly due to non-operating income from used car sales.

• Margin Outlook:

  • Li Auto aims for higher gross margins in FY22 compared to FY21, despite rising raw material costs.
  • Proven supply chain management has increased confidence in its sales and profitability forecasts.

• Catalysts:

  • The X01 model is expected to be a short-term positive catalyst due to unique features not found in rival models.
  • The company is catching up in proprietary AD development, with inter-city road AD functions potentially available by the end of the year, which could significantly lift its valuation.

• Key Risks:

  • Slower AD development than expected.
  • Lower sales volume than projected.
  • Sector-wide de-rating.

Financial Projections

Valuation and Rating

• Target Price: US$48.00
• Current Price: US$27.89
• Up/Downside: +72.1%
• Rating: BUY (maintained)

Share Performance

Shareholding Structure

Key Ratios

Key Financial Highlights

• Sales Volume: Projected to reach 180,000 units in FY22.
• Revenue Forecast: Raised FY22 revenue by 3.4% due to higher ASP estimates.
• Net Loss in FY22: Narrowed compared to prior estimates.
• Profitability in FY23: Expected to turn profitable even with a 10% R&D ratio.

Key Risks and Considerations

• AD Development: Potential delays could impact valuation.
• Sales Volume: Lower than expected may affect profitability.
• Sector De-rating: Possible negative impact on the stock's performance.
• Regulatory and Disclosure: The report is not tailored for individual investors and carries general investment risks.

Analyst Certification

• The analyst certifies that the views expressed accurately reflect their personal opinions.
• No part of the analyst's compensation is directly related to the report's content.
• The analyst has not traded in the stock covered in the report within 30 days prior to the report's issuance.

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months.
• HOLD: Potential return of +15% to -10% over next 12 months.
• SELL: Potential loss of over 10% over next 12 months.
• OUTPERFORM: Industry expected to outperform the market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the market benchmark.
• UNDERPERFORM: Industry expected to underperform the market benchmark.

Important Disclosures

• This report is not investment advice and should not be relied upon for making investment decisions.
• CMBIGM is not liable for any losses incurred from relying on the information in the report.
• The information is based on public data and may be subject to change.
• The report may not be distributed to persons outside the specified categories.

Distribution Restrictions

• UK: Only for persons falling within Article 19(5) or Article 49(2) of the Financial Services and Markets Act 2000.
• US: Intended for major US institutional investors only; not for general distribution.
• Singapore: Distributed by CMBISG, an exempt financial adviser, and legal responsibility is accepted only to the extent required by law.