Zhitong Finance and Economics APP learned that Soochow Securities released a research report stating that it maintains a "buy" rating for li auto inc-W (02015) due to better-than-expected gross margin performance in Q3 24, raising the 2024 performance expectations to 7.8 billion yuan (previously 7.5 billion yuan). Considering intensified industry competition, it lowered the 2025/2026 net income expectations to 10.3/15.3 billion yuan (previously 12.1/17.6 billion yuan), -34%/+33%/+48% year-on-year. The company achieved revenue of 42.87 billion yuan in 2024Q3, with vehicle sales revenue reaching 41.32 billion yuan. Q3 net income attributable to common shareholders was 2.81 billion yuan, and Non-GAAP net income was 3.85 billion yuan.

The main viewpoints of Soochow Securities are as follows:

Q3 overall performance met expectations.

1) Revenue: Li auto inc delivered 0.153 million vehicles in Q3, with a sequential and year-on-year growth of +45.4%/+40.8%, corresponding to an average vehicle price of 0.27 million yuan, -15.5%/-3.2% sequentially and year-on-year. The significant increase in L6 sales volume contributed mainly to the total sales volume, an increase of +13 percentage points compared to the previous period.

2) Gross Margin: The company's overall gross margin in Q3 was 21.5%, a sequential and year-on-year change of -0.5/+2.0 percentage points, with the automobile sales business gross margin at 20.9%, a sequential and year-on-year change of -0.3/+2.2 percentage points. The gross margin performance exceeded expectations, primarily due to overall restrained discounts in Q3 and a significant scale effect from a 41% increase in sales volume.

3) Expense Ratio: The company's R&D expenses in Q3 were 2.6 billion yuan, SG&A expenses were 3.4 billion yuan, with expense ratios of 6.0%/7.8% respectively, -2.1/+0.5 percentage points year-on-year, -3.5/-1.1 percentage points sequentially, showing significant improvement sequentially. The increase in SG&A expenses was due to the confirmation of stock payment compensation expenses by the company's CEO, Li Xiang, in this quarter, and an increase in the number of employees resulting in higher compensation. Overall, channel expansion was restrained, with the company having 479 retail centers nationwide as of the end of September, an increase of 2 compared to the end of June, and a significant improvement in single-store efficiency. R&D expenses decreased by 0.5 billion yuan sequentially, mainly due to reduced costs in the design and development of new products and technologies, as well as reduced employee compensation.

Interest income and investment income: Q3 was -0.02 billion yuan, with a decrease of 0.46/0.39 billion yuan on a quarter-on-quarter basis, mainly due to the decline in investment income from imotionautotech.

Profit: The company achieved a per vehicle profit of 0.025 million yuan (Non-GAAP basis) in Q3, with a decrease of -23.6%/+82.0% on a quarter-on-quarter basis. The main reasons for the quarter-on-quarter improvement are the increase in per vehicle gross margin due to scale effects and the reduction in per vehicle expenses due to strict cost control.

6) Cash: As of September 30, 2024, the cash position was RMB 106.5 billion. 2024Q3free cash flowAmounted to RMB 9.1 billion, turning positive from the previous period.