4Q22 net profit becomes positive; 2023 delivery guidelines exceed expectations
Li Auto Inc. 's 4Q22 income is 17.65 billion yuan, in line with Bloomberg's consensus expectations. The gross profit margin of cars is 20.0%, lower than Bloomberg's consensus expectations of 1.3pp, mainly due to the replacement of old and new models. The main advantages are: 1) the 1Q23 auto sales guidelines are 5.2-55000 vehicles, 12-18% higher than Bloomberg's consensus forecast; the monthly delivery target of 30,000 units and the annual delivery target of 28-300000 units are all more optimistic than market expectations. 2) the net profit of 4Q22 is 270 million yuan, which is higher than expected. The main reason is that the ability to control fees is outstanding, and OPEX fees are 16.1% lower than Bloomberg's consensus expectations. We maintain Li Auto Inc. 's total revenue forecast of RMB 947,0159.1 billion in 2024, and we forecast total revenue of 182.4 billion yuan in 2025. Taking into account the fierce competition in the Chinese electric car market this year, we maintain the target price of HK $140, based on 2.8x 2023e PS, which is 5 per cent higher than the average 2.7x of comparable companies (previous value: 2.8x 2023e PS, 2 per cent higher than the average of comparable companies). Maintain a "buy" rating.
2022 Review: although the gross profit margin of the car was lower than expected; the net profit of the fee pressure drop exceeded expectations, Li Auto Inc. 's 4Q22 income was 17.65 billion yuan, in line with Bloomberg consensus expectations. Affected by factors such as the climbing of new car capacity in L9Acer 8 and ONE inventory, the company's auto business gross profit margin was 20.0%, lower than Bloomberg's consensus expectations of 1.3pp. But 4Q22's net profit was 270 million yuan, significantly exceeding Bloomberg's consensus estimate of-120 million yuan. The main reason is that the SG&A/R&D fee fell to 1.63 trillion yuan in a single quarter, and the overall OPEX fee was 16.1% lower than Bloomberg's consensus estimate.
Outlook for 2023: car sales are expected to exceed expectations; gross margin pressure company expects 1Q23 vehicle delivery to be 5.2-55000 vehicles, up 64.0-73.4% year-on-year, 12-18% higher than Bloomberg consensus forecast; revenue 174.5-18.45 billion yuan, up 82.5-93.0% year-on-year, 6-12% higher than Bloomberg consensus. Delivery of the L7 begins in March and the Air version begins in April. The company reiterated that May is the first full month for the delivery of all versions of the L7, 2008 and 9, with a monthly delivery target of 30,000 vehicles (including 5000 for the Air version), which is higher than market expectations. Considering the accumulation of previous orders, we judge that the monthly sales of Q2 may exceed 30,000 units. In terms of gross profit margin, this year is faced with 1) electric car price war; 2) price game with battery and other parts manufacturers; and 3) L7 production capacity climbing and other pressures. We are optimistic that the company will basically maintain a car gross profit margin of 21% this year.
Maintain the target price of HK $140 and the "buy" rating
We maintain the total revenue forecast of RMB 947,0159.1 billion for Li Auto Inc. 2023Compact in 2024, and we forecast the total revenue of the company to be RMB 182.4 billion in 2025. Considering the fierce competition in China's electric car market this year and the intensification of market competition this year, we maintain the target price of HK $140. based on 2.8x2023E PS, it is 5% higher than the average 2.7x of comparable companies (previous value: 22.8x 2023e PS, 2% higher than the average of comparable companies). Maintain a "buy" rating.
Risk hint: the growth of demand for new energy vehicles is not as expected, and the permeability of intelligent configuration is not as expected.