2022Q4 returns to profitability and 2023Q1 delivery guidance is strong. The company delivered about 46000 2022Q4 vehicles, + 32% year-on-year, and achieved revenue of 17.65 billion yuan, + 66% year-on-year, in line with the guidelines. 2022Q4 achieved a net profit of 260 million yuan, while non-GAAP made a net profit of 970 million yuan belonging to common shareholders, mainly due to the rapid repair of gross profit margin and the decline in expense rate. The company is rich in cash on hand, as of 2022Q4 cash on hand and time deposits totaled 58.5 billion yuan. The company's 2022Q4 guidelines are strong, with sales of 5.2-55000 units and revenue of 174.5-18.45 billion yuan, an increase of 82.5% and 93.0%.
The price of 30-500000 comes with three models, and sales are expected to grow rapidly. Model side: the company is about to start delivering the L7 and will start delivering the L7/L8 Air version in April. At present, the 30-500000 price with a complete matrix of SUV models can meet the travel needs of consumers with different spaces and seats. At present, the order delivery period of the company's three models is about 1 month, with a certain order support. In addition to the extended range models, the company is expected to release new models based on pure electric high voltage platform within this year. Based on the clear vehicle positioning, perfect product matrix and strong supply chain management capabilities shown by rapid production, we expect Li Auto Inc. to deliver 260000 units in 2023. Sales network: the company currently has 288 retail centers covering 121 cities, and will continue to expand its store network in second-and third-tier cities and upgrade existing stores at the same time.
It is expected to open urban NOA internal testing this year, and develop a self-developed AI reasoning engine to improve cockpit interaction performance. 1MUE N stage, Li Auto Inc. continues to upgrade intelligent attributes. Smart driver: the company plans to test the NOA function in the open city of 2023Q4 within early Bird users; in addition, the company has launched a self-developed AEB algorithm that integrates lidar perception to further expand the AEB coverage scenarios and improve security. Intelligent cockpit end: all L series models will be integrated with cloud architecture at the online end, integrated with LisaRT, an inference engine for on-board scene AI, to improve chip operation efficiency, enhance the accuracy and response speed of multi-tone area cross-screen voice interaction, gesture interaction, multi-touch and environment perception of the whole vehicle.
2023 profit: gross profit margin is expected to maintain a high level, expense rate is expected to continue to decline. Gross margin end:
The company's 2022Q4 gross profit margin was 20.2%, of which the gross profit margin on vehicle sales was 20.0%, down 2.3pct from the same period last year, mainly due to the rising cost of batteries, the climbing of L8/L9 production capacity and the ideal ONE inventory clearance and other factors. We expect the company's gross profit margin to stabilize at a high level of around 20% in the future due to the scale effect brought about by the high sales of L platform models and a high degree of reuse of parts. Cost rate: the company's 2022Q4 R & D expenditure is 2.07 billion yuan, and the R & D expense rate is 11.7%. The company is expected to continue to invest in vehicle models, technology platforms and intelligent underlying systems, and the net R & D investment will continue to grow, but the R & D expenditure rate is expected to remain low in double digits. The 2022Q4 sales fee rate is 9.2%, which is lower than the same period last year. The company plans to continue to expand its stores, but it is expected that the sales fee rate will still be lower than the R & D expense rate with the growth of sales.
Raise the target price and reiterate the "buy" rating. We estimate that in 2022-2025, the company will sell about 38 / 510000 of the 13x26Compact, with a total revenue of 453, 934, and 1,248 million, and a net profit of 0%, 4%, 4% and 6% for non-GAAP.
Based on the company's excellent productivity and sound profitability, we give it a target market capitalization of about 261.6 billion RMB, corresponding to about 3x 2023e Pmax S, raise the target price to (2015.HK) about HK $155and (LI.O) about US $39, reiterating its "buy" rating. We estimate that the net profit of the company's non-GAAP in 2025 is expected to reach 9.7 billion yuan, corresponding to the target market value of about 27 times PCME, 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.