LI’s performance is coming! Pre-market plunge

China Fund News reporter Wen Xi

On August 8th, LI released a second quarterly report that was quite beyond expectations. The revenue of this new car company in the first half of the year has reached 47.44 billion yuan, which has exceeded its annual revenue of 45.287 billion yuan last year. At the same time, it achieved a net profit of 2.31 billion yuan in the second quarter, which is the third consecutive quarter that LI achieved positive profit.

However, LI also gave a conservative delivery forecast for the third quarter, which is expected to deliver 100,000 to 103,000 vehicles in the third quarter. Combined with the delivery of 34,100 vehicles in July, in the next two months, it is ideal to achieve 33,000-34,500 vehicles respectively, even lower than the delivery in July.

According to its management in the evening conference call, LI’s current production capacity has reached its limit, mainly due to the supply of spare parts. Before the US stock market closed in the evening, LI’s share price fell instead of rising, with the share price falling by more than 8% at one time. As of the time of writing, the company’s share price still fell by more than 7%.

Half-year revenue exceeds the whole year.

LI’s interim report data shows that the company achieved revenue of 28.65 billion yuan in the second quarter, up 228.1% year-on-year and 52.5% quarter-on-quarter. In the first quarter of this year, LI achieved a revenue of 18.79 billion yuan. In the first half of the year, its total revenue has reached 47.44 billion yuan, which has exceeded its annual revenue of 45.287 billion yuan last year.

Specifically, LI’s vehicle sales revenue in the second quarter was 27.97 billion yuan, a year-on-year increase of 229.7% and a quarter-on-quarter increase of 52.6%; Other sales and service income was 681 million yuan, up 173.4% year-on-year and 48.1% quarter-on-quarter.

In terms of gross profit margin, the gross profit margin of vehicles in LI in the second quarter was 21%, and the gross profit margin of sales was 21.8%. This ratio is not much different year-on-year. In the first quarter, the above two figures were 19.8% and 20.39% respectively.

In terms of net profit, LI achieved a net profit of 2.31 billion yuan in the second quarter and made profits for three consecutive quarters. In the first quarter of this year and the fourth quarter of last year, the company achieved a net profit of 934 million yuan and 265 million yuan respectively. Among the three new forces of "Wei Xiaoli", LI took the lead in achieving a relatively stable positive profit.

In terms of expense ratio, LI’s R&D expenses, sales and administrative expenses in the second quarter totaled 4.735 billion yuan, which was 35.4% higher than that in the first quarter, and 65.73% higher than that in the last year.

Judging from the proportion of the above expenses in revenue, the expense ratio of LI in the second quarter was 16.53%, which was lower than 18.61% in the first quarter of this year. In the industry’s view, this is also the decrease in the expense rate caused by the promotion and scale of delivery in LI.

Delivery in the third quarter is conservative

From the performance data, LI has actually been ahead of many new car companies, which also stems from its steady growth in delivery this year. Since the formation of a three-vehicle matrix, this new car company has seen an obvious growth trend in delivery.

In the first quarter of 2023, LI delivered 52,600 vehicles, up 65.8% year-on-year. At that time, LI predicted that the number of vehicles delivered in the second quarter would reach 76,000 to 81,000.

From the whole second quarter, the total delivery volume of LI was 86,500 vehicles, up by 201.6% year-on-year, which obviously exceeded previous expectations. In this quarter, LI achieved its goal of "striving to deliver more than 30,000 vehicles in a single month in June." The company delivered 32,600 vehicles in June, breaking through the monthly 30,000 mark for the first time, with a year-on-year increase of 150.1%.

Moreover, its delivery volume in the first half of 2023 reached 139,100 vehicles, which has exceeded the delivery volume in 2022. According to the delivery volume of 34,100 vehicles in July announced on August 1st, LI has stood at the 30,000-vehicle barrier for two consecutive months, and the cumulative delivery has reached 173,300 vehicles during the year.

However, for the third quarter, LI gave an obviously conservative delivery expectation. The company expects to deliver 100,000 to 103,000 vehicles in the third quarter, up 277.0% to 288.3% year-on-year.

Combined with the delivery of 34,100 vehicles in July, in the next two months, LI only needs to achieve the sales volume of 33,000-34,500 vehicles to reach the sales target. However, the expected monthly delivery volume is even lower than that in July. More crucially, LI once shouted that the monthly delivery volume reached 40,000 in the fourth quarter.

Production capacity has reached its limit.

In the evening conference call, some analysts also asked about the expected delivery in the third quarter. Li Xiang, CEO of LI, bluntly said, "The current delivery expectation is our capacity limit". According to the management of LI in the conference call, its current production capacity is 50,000 vehicles/month, and the bottleneck of its production capacity is mainly caused by the supply of spare parts.

As a matter of fact, Li Xiang has mentioned the limitation of production capacity on sales many times in his Weibo. On July 25, Li Xiang said that "the bottleneck of production capacity of 8,000 vehicles/week continues". On August 1st, Li Xiang once again pointed out that "the production capacity in this quarter is the only bottleneck, and there is no solution in this quarter".

According to a research report of Debon Securities, there are currently three main production lines in LI, namely Changzhou Base Production Line 1, Changzhou Base Production Line 2 and Beijing Green Smart Factory (planned). The monthly production capacity of the three lines is 25,000-25,000 vehicles/month, 12,000-12,000 vehicles/month and 100,000 vehicles/year respectively (planned). The above three production lines respectively produce ideal L9 and ideal L8, ideal L7 and ideal L8, and the planned pure electric vehicles.

It is worth mentioning that the more conservative delivery expectations also correspond to the same conservative revenue targets. The company mentioned in its interim report that its goal is to achieve revenue exceeding 100 billion yuan in 2023. Although this figure is significantly higher than last year, it is lower than market expectations in terms of splitting.

LI predicts that its total revenue in the third quarter will reach 32.33 billion yuan to 33.3 billion yuan. This also means that its revenue in the first three quarters will reach 79.77 billion yuan to 80.74 billion yuan. Based on this calculation, the company only needs to reach 19.26 billion yuan-20.23 billion yuan in the last quarter to break through the 100 billion mark.

Therefore, although LI handed over a relatively beautiful second-quarter performance, its US stocks plunged by more than 8% before the market. As of the time of writing, LI’s US stocks still fell more than 7%.

Editor: Xiao Mo

Audit: Muyu

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Original title: "LI’s performance is coming! Pre-market crash

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