To The Moon

$Li Auto(LI)$ released its quarterly report, with revenue slightly exceeding market expectations, and the stock price once rose over 7% before the bell.

Compared to analysts' expectations, Q4 revenue only slightly exceeded by 0.04%. Adjusted net income greatly exceeded expectations, beating analysts' forecasts by 167.5%.

In terms of operating income, Li Auto lost 134 million RMB in the fourth quarter, compared to income of 24.1 million in the same period in 2021. Therefore, the big beat in net income had limited stimulus to the stock price.

However, Li Auto's earnings can definitely beat other new energy car companies. Compared to $Tesla Motors(TSLA)$, Li Auto has an advantage in terms of growth and valuation.

Key financial data

1) Revenue of $17.65 billion in the fourth quarter of last year, up 66.2% year-over-year.

New energy car companies release car sales every month, from which investors can project the scale of revenue for the quarter.

According to the sales data disclosed by Li Auto, it sold 46,319 units in the fourth quarter of last year, up 31.5% year-on-year. The reason why the actual revenue growth rate is much higher than the sales volume is that the new model L9 is priced higher after the discontinuation of the one.

For example, the one sells for about $350,000, while the L9 goes up to $460,000.

2) Gross Margin

Gross margin returned to normal in the fourth quarter, reaching 20.2%. Although lower than the 22.4% in the same period of FY21, it has increased significantly compared to the third quarter of last year.

3) Net Income

Although the net income in the fourth quarter was 265 million in a single quarter, the operating profit was a loss of 134 million. Thus, the earnings on the financial statements were mainly from interest and other income.

Although the profit did not come from car sales, Li Auto has the healthiest financials compared to the huge losses of new energy companies like $NIO Inc.(NIO)$ and $XPeng Inc.(XPEV)$ .

4) Sales guidance for Q1 2023

Li Auto expects first quarter sales to be 52,000-55,000 units, up 64%-73.4% year-over-year. Referring to previous quarterly guidance, the actual sales will likely be close to the upper limit.

Taking the guidance's upper limit of 55,000 units, excluding the 15,141 units already announced for January, the company's average sales in February and March will be at 19,930 units, close to the highest level ever.

Overall, Li Auto's model positioning is the best among Chinese new energy companies, Nio's model has been so-so, and XPeng cars are ringing alarm bells.

In terms of stock price and market cap, Li Auto has surpassed the combined market cap of Nio and XPeng.

5) P/S valuation

Compare this to Tesla, where Bloomberg analysts expect Li Auto's 2023 revenue growth to be 103.6% compared to Tesla's 26%. Taking the price-to-sales ratio valuation comparison, Tesla is even higher than Li Auto.

I hope Li Auto can achieve Davis double play in 2023!