BofA Securities revised its outlook for Li Auto (NASDAQ: ), elevating its value goal to $31 from the earlier $30, whereas reaffirming a purchase score on the inventory. The adjustment comes after the corporate launched its second-quarter 2024 monetary outcomes.
Li Auto’s income was RMB 31.7 billion, a rise of 11% from final yr and a rise of 24% from the earlier quarter. Though the gross revenue margin (GPM) fell by 2.3 share factors from the identical interval final yr and 1.1 share factors from the earlier quarter, the gross revenue margin of 19.5% was nonetheless barely increased than the anticipated 19.4%.
The lower in gross revenue margin was attributed to a lower in common promoting value, primarily as a consequence of a rise within the gross sales mixture of L6 fashions and pricing reductions. The ratio of working bills to gross sales was 18.0%, 1.9 share factors increased than the identical interval final yr, however down 4.9 share factors from the earlier quarter. The sequential lower was as a consequence of worker compensation controls and headcount reductions.
Li Auto’s earnings additionally exceeded expectations, with second-quarter non-GAAP earnings reaching RMB 1.5 billion, a quarterly enhance of 18%. This determine considerably exceeded expectations of RMB 697 million as a consequence of decrease working bills.
In different current information, Li Auto reported robust second-quarter 2024 outcomes, with vital gross sales and market share beneficial properties. Throughout the interval, the corporate delivered greater than 108,000 automobiles, a rise of 25.5% in contrast with final yr.
Complete income reached RMB 31.7 billion, a rise of 10.6% over the earlier yr, and gross revenue margin was wholesome at 19.5%. Nevertheless, internet revenue decreased by 52.3% year-on-year, however improved by 86.2% from the earlier quarter.
Trying ahead, Li Auto expects to ship greater than 500,000 automobiles by the top of the yr. The corporate additionally plans to launch numerous 800-volt high-voltage pure electrical automobiles subsequent yr. Regardless of the sharp drop in internet revenue, the corporate nonetheless maintains a powerful money place of 97.3 billion yuan as of June 2024 and expects to proceed to put up optimistic free money circulate from the third quarter.
Funding Skilled Insights
Following Li Auto’s current monetary outcomes, InvestingPro information highlights the corporate’s vital market place, with a market capitalization of US$22.51 billion. Regardless of current market volatility, which has induced the inventory value to plummet 61.2% over the previous six months, analysts stay optimistic in regards to the firm’s future. That is additional supported by robust income progress of 79.66% within the trailing 12 months to Q2 2024, demonstrating the corporate’s speedy enlargement within the automotive business.
Moreover, Li Auto’s monetary well being is highlighted by an InvestingPro tip that notes the corporate holds more money than debt on its steadiness sheet, laying a stable basis for future progress. Moreover, the corporate’s valuation implies a powerful free money circulate yield, which may very well be a pretty level for traders on the lookout for an organization with excessive money technology potential relative to its share value. For these excited about digging deeper into the funds of their perfect automobile and studying extra InvestingPro Suggestions, a further 12 ideas can be found at: investment expert platform.
Li Auto’s adjusted price-to-earnings ratio is 13.22, which is at an affordable degree, and the corporate’s present low income valuation a number of could entice value-oriented traders. Whereas the inventory is at present buying and selling close to its 52-week low, this might present a shopping for alternative for many who consider within the firm’s long-term prospects, particularly contemplating analysts are forecasting profitability this yr.
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