Li Auto dropped 12% in Monday trading after it reported earnings.
Li Auto forecast rising demand for its vehicles in the second quarter after its first-quarter profit was hurt by a steep rise in research and other operating expenses that offset higher sales.
The Chinese hybrid-vehicle specialist said Monday that first-quarter net profit fell 36% from a year earlier to 592.6 million yuan ($82.0 million). That was well short of estimates for CNY1.63 billion in a FactSet poll of analysts and marked a 90% drop from the fourth quarter, when Li Auto posted a record number of vehicle deliveries.
Li Auto swung to an operating loss in the first quarter, with operating expenses up 71% from a year ago, partly due to higher staff levels and the expansion of its sales and servicing network. The bottom line was supported by higher net interest income and investment income, which more than doubled.
Revenue rose 36% to CNY25.63 billion, just above analysts’ estimates of CNY25.42 billion. Li Auto delivered 80,400 vehicles in the first quarter, up from 52,584 a year ago but down from nearly 132,000 in the fourth quarter.
Second-quarter vehicle deliveries are expected at 105,000 to 110,000 units versus the market’s expectation of some 130,692 units.
The Beijing-based company’s Nasdaq-listed ADRs, down 34% this year, fell 4.2% in premarket trading.
Li Auto has hit speed bumps in 2024 after weaker-than-expected orders for the MEGA, its first fully electric vehicle. Soon after the EV’s debut in March, Li Auto cut its first-quarter sales target, citing missteps in rollout strategy.
Still, the company maintained its status as one of the few Chinese EV makers with a gross margin above 20%. Its first-quarter gross margin was 20.6%, up from 20.4% a year earlier and down from 23.5% in the fourth quarter. Rival BYD, the world’s largest maker of EVs, recently reported a gross margin of 21.9% in the first quarter.
Li Auto’s vehicle margin slipped to 19.3% from 19.8% a year ago and 22.7% in the fourth quarter, hurt by lower average selling prices as the company changed pricing strategy, it said.
Li Auto has been among a handful of profitable Chinese EV makers, but it faces intense price competition from rivals including Huawei-backed Seres, Tesla, BYD and XPeng. The company cut prices across the board last month.
Investors are hoping that sales will recover in May, supported by a government trade-in program and orders for its L6, a five-seat premium SUV launched last month.
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