(资料图片仅供参考)

Core views:　　Li Auto’s gross profit margin (GPM) dropped to 12.7% in 3Q22, mainly due to the accrued costs for Li ONE. After deducting relevant impacts, we estimate that the GPM of the Company’s vehicle manufacturing segment is stable at about 20.8%. The non-GAAP net loss in the quarter was Rmb1.65bn, and the 4Q sales guidance was 45k-48k vehicles. The sales volume of Li Auto in Oct and Nov was 10k and 15k, respectively. We estimate that the sales volume in Dec will be about 20k to 23k. At the same time, the Company announced new personnel changes aimed at upgrading the organizational structure and breaking through the revenue threshold of Rmb100bn. With a foothold in intelligent electric vehicles (EVs), Li Auto aims to grow into a prominent technology company. We maintain an optimistic view towards Li Auto and its sustainable development potential, and reiterate our “BUY” rating.　　Abstract:　　Financial overview: 3Q revenue continued to grow, and the GPM was dragged down by product iteration. 1) Operating revenue: the Company"s quarterly revenue was Rmb9.34bn (+20% YoY, +7% QoQ). 2) Gross profit margin: The blended GPM dropped to 12.7% in 3Q22 (-10.6ppts YoY, -8.8ppts QoQ) while the GPM of auto sales decreased to 12.0% (-9.1ppts YoY, -9.2ppts QoQ). The main reason is that L9 has just been delivered, and the prior Li ONE model has accrued some inventory reserves and purchase commitment losses (about Rmb800mn). After deducting the relevant impacts, we estimate that the GPM of the vehicle manufacturing segment is about 20.8%, and its profitability is stable. 3) Net profit: Li Auto"s GAAP net profit in the current quarter was Rmb-1.65bn (vs. Rmb-22mn in 3Q21 and Rmb-640mn in 2Q22). The non GAAP net profit in the current quarter was Rmb-1.24bn (net profit in the same period last year was Rmb340mn, and the previous quarter was Rmb-180mn). The net profit declined mainly due to the decline in the GPM. 4) Cashflow: The cashflow from operating activities in the quarter was Rmb-508mn (vs. Rmb2.17bn in the same period of last year and Rmb1.13bn in the previous quarter). 5) At-the-market (ATM) offering: As of Dec 9, 2022, Li Auto had sold 9.43mn American depositary shares (ADS) in total, raising about US$366mn, on par with that in Aug 2022.　　Sales volume: 3Q sales volume is higher than the previous guidance, and 4Q has a positive outlook with the monthly sales in Dec likely to beat 20k. 1) Sales volume & guidance: In 3Q22, Li Auto delivered 26.5k vehicles (+6% YoY, - 8% QoQ), higher than the sales volume guidance of 25.5k vehicles given by the Company in Sep. The Company estimates that the 4Q sales volume will be 45k-48k (+28%-+36% YoY). The sales volume in Oct was 10k and that in Nov was 15k. Based on this calculation, we estimate that the sales volume in Dec will be 20k to 23k vehicles. 2) Delivery: From Jan to Nov 2022, the Company delivered 112k vehicles (+47% YoY), and 236k vehicles have been delivered since its debut. According to the sales guidance, we maintain the sales forecast for 2022-2024 at 135k/300k/650k vehicles, respectively. Although the macro environment is under pressure and the competition in the new energy vehicle (NEV) market is becoming increasingly fierce, we still believe that Li Auto will continue to increase its market share by leveraging the extended-range electric vehicle (EREV) model series.　　Model planning: L7 and the first BEV model will likely be launched in 2023, and we are optimistic about the earnings improvement brought by the ramp-up of the L7/8/9. 1) At the end of Aug 2022, the Company"s second car, L9, started mass production and delivery. According to the data of the China Association of Automobile Manufacturers (CAAM), the sales of L9 in Sep and Oct were 10.1k and 9.1k, respectively, making L9 the sales champion of large full-size SUVs in the Chinese market. According to the information on the Company"s official website, the current delivery time of L9 is Feb 15, 2023. Considering the sufficient orders of L9 in hand, we are optimistic about the sales performance of L9 in the next few months-likely to maintain at about 10k vehicles per month. 2) On Sep 30, 2022, the Company held the L8/L7 launch event. (a) The L8 was delivered in Nov. According to the information on the Company"s official website, the delivery time of the L8 Max/Pro is about Jan 22, 2023. (b) The Company expects that the L7 will be delivered in Feb 2023. 3) According to the Company"s 3Q teleconference, its first battery electric vehicle (BEV) is likely to be launched in 2023, and is currently in the normal state of research and development. 4) Marklines data show that in 2021, the total sales volume of models priced above Rmb300k in the Chinese market was about 3.5mn. We believe that with the continuous improvement of Li Auto"s product lines covering a wider price band, its overall market share will rise steadily in the future. Considering the appearance of the L7/8/9 and the high degree of reuse of intelligent software and hardware, we believe the Company"s profitability is on track to improve once the sales volume of models increases.　　Management changes help upgrade the organizational structure to the matrix mode, and the revenue target is set above Rmb100bn. 1) On Dec 9, Li Auto issued a new personnel appointment. Specifically: (a) From Jan 1, 2023, SHEN Yanan will resign as the executive director and president of the Company, to be replaced by MA Donghui; XIE Yan will be appointed as CTO of the Company from Dec 12, 2022. (b) The supply team (including supply chain, manufacturing and quality) managed by SHEN Yanan will be managed by MA Donghui. The business team (including sales, service and charging network) will be directly managed by CEO LI Xiang. (c) XIE Yan once served as the vice president of consumer business group software engineering in Huawei and the head of the Harmony OS Department, responsible for the research and development of Harmony OS and other operating system technologies. 2) According to LI Xiang, the founder of the Company, at the earnings call, Li Auto carried out this round of personnel adjustment to upgrade to the matrix organization model, aiming to achieve a breakthrough in revenue, targeting Rmb100bn and further challenging Rmb1trn. At present, the Company is in the development stage from 1 to 10, and quality will become the driver of efficiency.　　Potential risks: Intensified competition in the industry caused by the acceleration of technology giants & traditional auto OEMs into the intelligent automobile segment; further price reduction of Tesla products leading to intensified competition in China"s intelligent electric vehicle industry; loss of key technical talents and difficulty in recruitment; valuation fluctuation caused by serious safety accidents in the autonomous driving industry; implementation of autonomous driving policy missing expectations due to stricter supervision; gross profit erosion due to the rise of EV battery prices; a shortage of on-board chip supply; the Company"s subsequent launch of new models and functions missing expectations; higher capex leading to disappointing growth in the Company’s free cashflow.　　Investment recommendation: Considering that Li Auto will likely maintain high selling and administrative expense ratios in 2H22 and 2023, as well as the provisions for inventory reserves and purchase commitment losses in 3Q22, we adjust the FY2022E/23E/24E revenue forecast to Rmb46.3bn/108.2bn/208.7bn (vs. earlier forecast of Rmb46.2bn/108.1bn/208.6bn). We adjust our non-GAAP net income forecast to Rmb-0.74bn/1.66bn/12.5bn (vs. earlier forecast of Rmb0.56bn/3.78bn/14.2bn). We remain optimistic about the Company and reiterate the “BUY” rating.【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。