Li Auto's Q1 revenue growth stagnates, net profit increases by 9.4%, Q2 revenue guidance falls short of expectations | Earnings Report Insights

In the traditional off-season for automobile sales, Li Auto's revenue slightly increased in the first quarter, with a net profit growth of 9.4% year-on-year. As the price war in the automotive industry intensified, Li Auto maintained profitability in the first quarter, with a gross margin of 20.5% remaining relatively stable.

On Thursday after the Hong Kong stock market closed, Li Auto released its first-quarter financial report. The report showed:

Revenue: Revenue of RMB 25.93 billion, up 1.1% year-on-year, estimated at RMB 25.12 billion.

Net Profit: Net profit of RMB 647 million, up 9.4% year-on-year; non-GAAP net profit of RMB 1.02 billion, down 20% year-on-year, estimated at RMB 1.19 billion.

Gross Margin: Gross margin of 20.5%, compared to 20.6% in the same period last year, negative free cash flow of RMB 2.53 billion, down 50% year-on-year;

Earnings per Share: Adjusted earnings per ADS of RMB 0.96, compared to RMB 1.21 in the same period last year; earnings per American Depositary Share of RMB 0.62, compared to RMB 0.56 in the same period last year, estimated at RMB 0.45;

Delivery Situation: Delivery volume in the first quarter was 92,864 vehicles, up 16% year-on-year, estimated at 91,087;

Performance Guidance: Expected Q2 revenue of RMB 32.5 billion to RMB 33.8 billion, below the market estimate of RMB 34.58 billion. Expected second-quarter delivery volume of 123,000 to 128,000 vehicles.

After the financial report was released, Li Auto's U.S. stock pre-market fell more than 5%, then narrowed to 2.4%.

Automotive Gross Margin Basically Slightly Increased

In the first quarter, vehicle delivery volume was 93,000 units, up 15.5% year-on-year, basically in line with the estimated 91,087 units. Automotive sales revenue was RMB 24.68 billion, up 1.8% year-on-year, estimated at RMB 23.62 billion.

In terms of profitability, the gross margin of 20.5% remained relatively stable, with the vehicle gross margin of 19.8% slightly increasing by 0.5 percentage points compared to the same period last year, reflecting the company's efforts in cost control and product structure optimization.

Net profit of RMB 647 million increased by 9.4% year-on-year, achieving profit growth in the context of weak revenue growth, mainly due to a 14% year-on-year decrease in operating expenses to RMB 5 billion, indicating that management has been relatively prudent in expense control In terms of cash flow, the net cash outflow from operating activities in the first quarter was 1.7 billion yuan. Although this represents a year-on-year improvement of 49.1%, it stands in stark contrast to the net inflow of 8.7 billion yuan in the fourth quarter of last year. Free cash flow was negative 2.5 billion yuan, marking two consecutive quarters of negative figures.

Cautiously Optimistic Guidance for Q2

Management's guidance for the second quarter indicates vehicle deliveries of 123,000 to 128,000 units, a year-on-year increase of 13.3% to 17.9%, with revenue projected at 32.5 to 33.8 billion yuan, a year-on-year growth of 2.5% to 6.7%. This guidance reflects a relatively cautious attitude, with growth rates slowing compared to the first quarter, possibly reflecting the reality of intensified market competition.

The upcoming launch of the first pure electric SUV, Li Auto i8, in July is highly anticipated, as it represents an important strategic move for the company in the pure electric sector, though its market performance remains to be validated. In the current environment of increasing "involution" in the new energy vehicle market, whether Li Auto can maintain its growth momentum through product strength and technological advantages will be a key variable that investors need to closely monitor