Source: Beast Finance Author: Beast Finance
Summary:
(1) Li Auto (LI) delivered 32,575 EVs in June, outpacing rivals NIO and Xpeng despite pressure from pricing and slowing demand in China's EV market car (XPEV).
(2) Ideal Auto's profit margin in the first quarter of 2023 is 22.4%, while NIO's is 5.1%, and Xiaopeng's is negative 2.5%.
(3) Achieving profitability in FY2023 may become a catalyst for the rise of Li Auto's share price.
Beast Finance believes that for investors in China's electric vehicle industry, Li Auto has very strong value, because the company is currently crushing other competitors, both in terms of production and delivery growth, especially in terms of delivery growth , such as Weilai and Xiaopeng Motors.
In June, Li Auto delivered a record 32,575 electric vehicles, surpassing the 30,000-delivery mark for the first time. Considering that China's electric vehicle market is facing price pressure and the demand for electric vehicles has been slowing down, it is indeed worthy of recognition that Li Auto can achieve such results under such circumstances. Therefore, we believe that for those who want to invest in China's electric vehicle market For investors, Li Auto may be a very valuable company.
Li Auto's latest delivery data
In June, Li Auto delivered a total of 32,575 electric vehicles, a year-on-year increase of 150.1%, and since January, due to operational improvements and strong delivery performance of L7, L8 and L9, Li Auto's deliveries volume has more than doubled.
The delivery volume of Ideal Motors in June was 3.1 times that of Weilai and 3.8 times that of Xiaopeng Motors. This is also the first month in the history of Ideal Auto to deliver more than 30,000 vehicles per month. Li Xiang, Chairman and CEO of Ideal Auto, also said that Ideal Auto aims to deliver 40,000 electric vehicles per month in the fourth quarter.
strong profit margins
Beast Finance believes that for all Chinese electric vehicle start-ups, one of the important factors to judge whether it is worth investing in is its profit margin. In the first quarter of this year, the profit margin of Li Auto’s entire vehicle was 22.4%. , the year-on-year decline is relatively mild, only 2.6 percentage points, while Weilai's profit margin in the first quarter of 2023 is 5.1% (down 13.0 percentage points year-on-year), and Xiaopeng Motors' profit margin is even negative 2.5% (down year-on-year 12.9 percentage points), due to aggressive promotions/price cuts, lower prices and removal of NEV subsidies.
The profit margin of Ideal Auto is the highest among the three companies. Bold Beast Finance believes that part of the reason is that the demand for its SUV-centric electric vehicle products is very strong, and customer service is also very strong, so it dares not pass price cuts/promotions and other activities To pursue sales growth, so the current gross profit margin of Li Auto is much higher than that of competitors.
Outlook for Q2 deliveries
Li Auto expects its Q2 deliveries to reach 76,000 to 81,000 units (the strongest forecast in the industry so far), and if it does come true, then Li Auto's Q2 sales The delivery volume will be 3.7 times that of Xiaopeng Motors (Xpeng Motors expects to deliver 21,000 and 22,000 vehicles in the second quarter) and 3.3 times that of NIO (NIO expects to deliver 20,000 vehicles in the second quarter. 23,000 to 25,000), which means that the delivery volume of Li Auto in the second quarter will increase by as much as 182% year-on-year.
The investment value of Li Auto in the field of electric vehicles
Although we are also optimistic about Weilai, Li Auto is still one of the companies with the fastest growth in delivery and the most investment value in China's electric vehicle market.
Li Auto also trades at a low P/E ratio of 1.4 times, while NIO and Xpeng Motors have P/E ratios of 1.3 and 1.7 times, respectively, and their annual deliveries have also declined materially due to slowing growth.
Historically, Li Auto has had a much higher P/E ratio than it does now, with an average P/E ratio of 1.74 last year, meaning investors are currently getting a P/E ratio that is nearly 20% lower than Li Auto's historical valuation.
Compared with Weilai and Xiaopeng Automobiles, Meng Beast Finance believes that Li Auto has another advantage: the market expects it to be profitable this year, and according to S&P capital IQ data, the market currently expects that Weilai and Xiaopeng Automobiles will be profitable at least in fiscal 2025. It won't be profitable until a year ago.
Li Auto's Risks
While Li Auto's L7, L8 and L9 sales are all growing very well right now, and the company has significantly outperformed its rivals in China's EV space, partly because it has a simpler, more focused Focus on the SUV production line, and have the ability not to cut prices.
But Beast Finance believes that investing in Li Auto stocks is still risky, and the biggest risk is: due to the increasingly fierce price competition in this industry, the profit margin of Li Auto may decline, and this is affecting the entire industry, so profitability The delay in time may become a catalyst for a sharp drop in Li Auto's stock price.
Conclusion
In June of this year, Li Auto took a further lead in the competition. Not only did the delivery volume hit a new high, but the profit margin is currently far ahead of the competitors.
Li Auto's delivery outlook for the second quarter and expectations for the fourth quarter indicate that Li Auto is expected to be profitable in fiscal year 2023, and this speed is three years ahead of Xiaopeng Motors and Weilai.... Bold Beast Finance believes that this is
possible It will become a catalyst for the rise of Li Auto's stock price.
Considering that Li Auto's price-earnings ratio is only 1.4 times, and the delivery growth rate and vehicle/gross margin are also significantly higher than those of competitors, we believe that Li Auto's risk profile is still very favorable for investors, and Li Auto is currently One of the companies with the most investment value in the field of electric vehicles.
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