20230131-招银国际-4Q22E_net_profit_likely_to_turn_positive_4页_841kb

Li Auto Inc. (LI US) Company Update Summary

Core Content Overview

CMB International Global Markets has issued an updated equity research report on Li Auto Inc., highlighting its financial performance and future outlook. The report maintains a BUY rating with a target price of US$44.00, which is based on a 3.3x FY23E P/S multiple. Li Auto is projected to turn a net profit of RMB 205mn in 4Q22E, marking a significant shift from previous losses.

Main Points

• 4Q22E Earnings Outlook:

  • Net profit is expected to turn positive due to record-high quarterly sales volume.
  • Gross margin is projected at 21.9%, leading to an estimated net profit of RMB 205mn.

• FY23E Outlook:

  • Sales volume forecast remains at 0.25mn units, which is lower than management guidance.
  • Gross margin is expected to be 22%, and R&D and SG&A expenses are projected at 11% and 12% of revenue, respectively.
  • Net profit is forecasted at RMB 568mn, making Li Auto the first NEV start-up in China to become profitable on CMB's estimates.

• Position Among NEV Trio:

  • Despite being more conservative than the Bloomberg consensus, CMB believes Li Auto is best positioned among the NEV trio for long-term success.
  • Sales and profitability are expected to outperform peers due to strong market positioning and cost control.

• Key Risks:

  • Slower autonomous driving development.
  • Lower-than-expected sales volume or gross margin.
  • Sector-wide de-rating could impact the valuation.

Financial Highlights

Revenue Growth

• FY20A: RMB 9,457mn
• FY21A: RMB 27,010mn (+185.6%)
• FY22E: RMB 45,279mn (+67.6%)
• FY23E: RMB 90,650mn (+100.2%)
• FY24E: RMB 119,550mn (+31.9%)

Net Profit

• FY20A: RMB -792mn
• FY21A: RMB -321mn
• FY22E: RMB -2,064mn
• FY23E: RMB 568mn
• FY24E: RMB 854mn

Gross Margin

• FY20A: 16.4%
• FY21A: 21.3%
• FY22E: 20.1%
• FY23E: 22.0%
• FY24E: 21.0%

Net Profit Margin

• FY20A: -8.4%
• FY21A: -1.2%
• FY22E: -4.6%
• FY23E: 0.6%
• FY24E: 0.7%

P/S Ratio

• FY20A: 7.5x
• FY21A: 5.4x
• FY22E: 3.7x
• FY23E: 1.9x
• FY24E: 1.4x

ROE

• FY20A: -6.6%
• FY21A: -0.9%
• FY22E: -5.1%
• FY23E: 1.4%
• FY24E: 2.1%

Valuation and Performance

• Current Price: US$24.97
• Target Price: US$44.00 (+76.2% upside)
• 12-Month Price Performance:
  • Absolute: +34.7% (1-mth), +66.6% (3-mth), -25.9% (6-mth)
  • Relative: +17.4% (1-mth), +19.2% (3-mth), -41.8% (6-mth)

Shareholding Structure

• Li Xiang: 22.3%
• Wang Xing: 18.8%
• Others: 58.9%

Stock Data

• Market Cap: US$24,471mn
• Avg 3-Month Turnover: US$232mn
• 52-Week High/Low: US$40.79 / US$13.62

Key Ratios

• Current Ratio: 7.3 (FY20A), 4.3 (FY21A), 2.7 (FY22E), 1.7 (FY23E), 1.3 (FY24E)
• Inventory Turnover Days: 48 (FY22E), 28 (FY21A), 26 (FY23E), 26 (FY24E)
• Receivable Turnover Days: 4 (FY22E), 2 (FY21A), 3 (FY22E), 4 (FY23E), 4 (FY24E)
• Payable Turnover Days: 146 (FY22E), 161 (FY21A), 150 (FY22E), 150 (FY23E), 130 (FY24E)

Analyst Certifications and Disclosures

• The analyst certifies that all views reflect personal opinions and no compensation is tied to the report's content.
• The analyst confirms no trading in the stock within 30 days prior to the report's issue and no trading for 3 business days after.
• The report is not an offer or solicitation to buy or sell securities.
• No liability is accepted for any losses resulting from reliance on the report.
• Conflicts of interest may exist, and the report is for intended recipients only.

Regulatory Notes

• UK: Only for Article 19(5) or Article 49(2)(a)-(d) individuals.
• US: Intended for major US institutional investors only.
• Singapore: Distributed by CMBISG, an Exempt Financial Adviser, and only to Accredited Investors, Expert Investors, or Institutional Investors.