To The Moon

Just now, $Li Auto(LI)$ $LI AUTO-W(02015)$ released its third quarter results, the performance was very excellent!

Specifically, revenue in the third quarter was 34.68 billion yuan, a year-on-year surge of 271.2%, exceeding analyst expectations of 33.74 billion yuan:

The surge in revenue was mainly due to the booming sales of cars, which sold totaled 105,108 units in the third quarter, a year-on-year increase of 286% :

Under the scale effect brought by the increase in sales volume and the decrease in battery costs, the gross profit margin in the third quarter was 22%, an increase of 0.2% from the previous quarter, while the net profit margin was the same as 8.1% in the previous quarter:

The net profit margin of 8.1% May not be the end point for Li. $Toyota(TM)$, a traditional fuel car, the net profit margin can reach 9%. Given the increased profitability brought about by intelligent cars, there is still room to rise for Li.

According to the current analyst forecast, Li's revenue will reach 179 billion yuan in 2024. If the net profit margin remains at 8.1%, its net profit is expected to reach 14.5 billion yuan, which is only 19.6 times the current market capitalization of 284.9 billion yuan.

Given Li's high growth rate, such a valuation is extremely safe.

But whether Li's stock price can soar depends on two factors, one is whether the battery electric vehicle model can become a hit, and the other is to maintain sales growth momentum in the face of fierce competition from large extended-range SUVs.

At present, according to Li performance guidance, the delivery of the fourth quarter is between 125,000 and 128,000 units, taking the median 126500 calculation. If the October sales are known to be 40,422 units, it is estimated that the average monthly sales from November to December will be about 43,039 units, and the monthly sales will hit another all-time high.

The company expects revenue in the fourth quarter to be between 38.46 billion and 39.38 billion yuan, the median increase of 120.5% from the same period last year, exceeding the analyst consensus of 36.58 billion yuan.

Sales in 2023 are no worry, but with the sales of Huawei's new M7 model, the competition for Li's extender-range SUV is becoming more fierce, and it is expected that more competitive models will be hit the market in 2024. Previously, $XPeng Inc.(XPEV)$ $XPENG-W(09868)$ and $NIO Inc.(NIO)$ $NIO Inc.(NIO.SI)$ $NIO-SW(09866)$, both new forces in car manufacturing, once suffered sales deterioration under fierce competition, and it is still unknown whether Li can withstand competitive pressure.

In addition, Li is different from NIO and Xpeng focusing on the battery electric vehicle route, which is taking the extended range hybrid, but industry knows that the extended range model is only the transition route of vehicle electrification, and the key to the future is battery electric vehicle competition.

In the third quarter results, Li announced that its first 5C battery electric super flagship model Li MEGA is progressing smoothly. It will be officially launched in December this year, and the delivery will be begin in February next year. If the model can sell well, it will have a significant impact on the stock price.

Therefore, after the release of the expected earnings report, Li stock price rose nearly 7% before the market, but the increase was soon narrowed to 2.9%. Considering that the delivery data in the third quarter is clear, and sales in October have broken through the 40,000 mark, so the impact of the third quarter results that exceed expectations to investors is not shocking.

More stimulus still requires whether there is any exciting news from the management at the earnings conference. Please follow the conference call at 8: 00 PM Beijing time.