BofA Securities has adjusted its outlook on Li Auto (NASDAQ: NASDAQ:), growing the worth goal to $31 from the earlier $30 whereas reiterating a Purchase score on the inventory. This adjustment follows the discharge of the corporate’s second-quarter monetary outcomes for 2024.
Li Auto reported a income of RMB 31.7 billion, marking an 11% year-over-year enhance and a 24% rise from the earlier quarter. Regardless of a decline in gross revenue margin (GPM) by 2.3 share factors year-over-year and 1.1 share factors from the final quarter, the GPM of 19.5% was nonetheless barely above the forecasted 19.4%.
The lower in GPM was attributed to a drop in common promoting costs, largely because of a better gross sales mixture of the L6 mannequin and pricing reductions. Working bills to gross sales ratio stood at 18.0%, which is 1.9 share factors greater in comparison with the identical interval final yr however 4.9 share factors decrease than the earlier quarter. The quarter-over-quarter lower was a results of managed worker compensation and a discount in headcount.
Li Auto additionally surpassed earnings expectations, with non-GAAP earnings reaching RMB 1.5 billion within the second quarter, an 18% enhance from the earlier quarter. This determine notably exceeded the estimate of RMB 697 million, fueled by decrease working bills.
In different latest information, Li Auto reported sturdy second-quarter outcomes for 2024, with important progress in gross sales and market share. The corporate delivered over 108,000 automobiles throughout this era, representing a year-over-year progress of 25.5%.
Whole revenues reached RMB31.7 billion, marking a ten.6% enhance from the earlier yr, with a stable gross margin of 19.5%. Nevertheless, the web earnings noticed a decline of 52.3% year-over-year however improved by 86.2% from the earlier quarter.
Wanting forward, Li Auto is optimistic about delivering over 500,000 automobiles by the tip of the yr. The corporate additionally plans to introduce a number of 800-volt excessive voltage pure electrical automobiles subsequent yr. Regardless of a big lower in web earnings, the corporate maintains a powerful money place with RMB97.3 billion as of June 2024, and expects a continued optimistic free money circulation from the third quarter onwards.
InvestingPro Insights
Following the latest monetary outcomes from Li Auto, InvestingPro information highlights the corporate’s important market presence with a market capitalization of $22.51 billion. Regardless of latest market volatility, which has seen the inventory worth take a considerable hit over the past six months with a 61.2% decline, analysts stay optimistic concerning the firm’s future. That is additional supported by a powerful income progress fee of 79.66% over the past twelve months as of Q2 2024, showcasing the corporate’s fast growth within the Vehicles business.
Furthermore, Li Auto’s monetary well being is underlined by an InvestingPro Tip that factors out the corporate holds more money than debt on its stability sheet, offering a stable basis for future progress. As well as, the corporate’s valuation implies a powerful free money circulation yield, which may very well be a sexy level for buyers looking for corporations with the potential for top money technology relative to their share worth. For these fascinated about a deeper dive into Li Auto’s financials and additional InvestingPro Ideas, there are an extra 12 ideas obtainable on the InvestingPro platform.
The adjusted P/E ratio for Li Auto stands at an affordable 13.22, and the corporate is buying and selling at a low income valuation a number of, which can enchantment to value-oriented buyers. Whereas the inventory is at present buying and selling close to its 52-week low, this might current a shopping for alternative for individuals who imagine within the firm’s long-term prospects, particularly contemplating that analysts predict profitability for the present yr.
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