2022Q2 income exceeds the guidance, and the operation is sound and cash-rich. The company delivered about 29000 2022Q2 vehicles, + 63% year-on-year, and achieved revenue of 8.73 billion yuan, + 73% year-on-year, exceeding previous guidelines. The net loss of Q2 non-GAAP belonging to ordinary shareholders was 520 million yuan, which was mainly due to the fluctuation of sales volume during the epidemic and the company's increased R & D and sales expenses. Q2 company still maintains a positive free cash flow of 450 million yuan, including operating cash flow of 1.13 billion yuan and capital expenditure of 680 million yuan, reflecting the company's stable self-hematopoietic ability. The company has plenty of cash on hand and strong anti-risk ability, as of Q2, the cash on hand is 53.65 billion yuan. In addition, the company announced plans for ATM issuance of no more than US $2 billion in June. As of August 14, the company has issued 9.43 million additional ADS shares and raised US $370 million. The company plans to continue equity financing according to market conditions to boost future R & D investment. The company's 2022Q3 guidelines are sales of 2.7-29000 units and revenue of 89.6-9.56 billion yuan, an increase of 15.3% and 22.9%.
L9 is expected to climb quickly, and L8 may be released faster than expected. Model end: as of August 1, L9 has confirmed orders for more than 30,000 units and cumulative orders for more than 50,000 units. L9 is scheduled to be delivered by the end of August, the company expects to climb to more than 10,000 in September, and Q4 delivery is expected to grow rapidly. In addition, the company's L8 model may be released faster than expected, and the release and delivery interval will be shortened to make up for the impact of fluctuations in ideal one orders. In 2023, the company plans to launch two new models based on the new extended range platform and pure electric high voltage platform, including a medium-sized car with a price band of 20-300000.
By 2025, the company is expected to gradually layout 20-30 Universe 30-40 Accord 40-50 three price bands, each to create at least one competitive pure electricity and extended range products.
On the sales and service network, even if affected by the epidemic, the company still plans to steadily expand its stores. As of July 2022, the company has 259 retail centers covering 118 cities, and operates 311 after-sales maintenance centers and authorized sheet spray centers in 226 cities.
Q3 gross profit margin may be under pressure, and the expense rate is expected to remain stable in the future. Gross margin end: the company's 2022Q2 gross profit margin is 21.5%, year-on-year + 2.6pct, month-on-month-1.1pct. Among them, the gross profit margin of vehicle sales was 21.2%, year-on-year + 2.5pct, month-on-month-1.2pct, mainly due to the decline in delivery volume affected by the epidemic. We expect the company's Q3 gross margin to be under pressure, on the one hand, due to the low gross margin of L9 at the initial stage of production, and on the other hand, the ideal ONE delivery decline and promotional policies will pull down the gross margin. Q4 is expected to climb with the L9 to complete, gross profit margin is expected to recover quickly. Cost rate: the R & D cost of Q2 is 1.53 billion yuan, an increase of 160 million yuan compared with Q1, the expense rate is 17.5%, and the month-on-month ratio is + 3.1pct, mainly due to the increase in R & D personnel and investment in the research and development of new models. It is expected that the company will continue to invest in intelligent and pure electric platforms this year, and R & D investment will continue to grow. The Q2 sales fee is 1.33 billion yuan, the expense rate is 15.2%, and the month-on-month ratio + 2.6pct is mainly due to the expansion of the sales network. It is expected that the annual sales expense rate will remain healthy.
Investment suggestion: we estimate that the company will sell about 14,000,000 vehicles in 2022-2025, the total revenue will reach 475Universe 889Universe 174.8 billion yuan, and the net profit of non-GAAP will be 0% Placement 4.3% / 6.6% Placement 7.4%.
Based on Li Auto Inc. 's excellent productivity and steady profitability in the new power echelon, we give it a target market capitalization of about 285.3 billion RMB, corresponding to about 6x 2022e Pmax S, a target price of (2015.HK) of HK $171and a target price of (LI.O) of about US $44, maintaining a "buy" rating. Li Auto Inc. 2020Q2 free cash flow continues to be positive, based on its robust business style and strong hematopoietic capacity, we estimate that the company's 2025 non-GAAP net profit is expected to reach 12.9 billion yuan, corresponding to the target market value of about 22 times Pmax E, with a certain margin of safety.
Risk tips: vehicle development and sales are not as expected risk, upstream parts supply fluctuation risk, intelligent driving technology iteration is not as expected risk.