Li Auto Inc
Li Auto Inc (NASDAQ: LI) is a China-based new energy passenger vehicles (NEV) automaker principally engaged in the design, develop, manufacture and sales of smart electric vehicles. The Company's primary products are sport utility vehicles (SUVs) under its brand Li ONE. It also sells peripheral products and provides related services, such as charging stalls, vehicle Internet connection services and extended lifetime warranties. The Company operates its businesses through its subsidiaries and variable interest entities (VIEs) in China.
Recent Financial and Business Updates:
- Vehicle sales in the first quarter of 2023 amounted to RMB18.33 billion (USD 2.67 billion), marking a substantial increase of 96.9% compared to RMB9.31 billion in the same quarter of 2022 and a 6.1% increase from RMB17.27 billion in the fourth quarter of 2022.
- The vehicle margin for the first quarter of 2023 was 19.8%, slightly lower than the 22.4% recorded in the first quarter of 2022 and the 20.0% in the fourth quarter of 2022. Total revenues for the first quarter of 2023 reached RMB18.79 billion (USD 2.74 billion), reflecting a significant surge of 96.5% from RMB9.56 billion in the first quarter of 2022 and a 6.4% increase from RMB17.65 billion in the fourth quarter of 2022.
- Gross profit in the first quarter of 2023 amounted to RMB3.83 billion (USD 557.7 million), representing a substantial growth of 77.0% compared to RMB2.16 billion in the first quarter of 2022 and a 7.4% increase from RMB3.57 billion in the fourth quarter of 2022. The gross margin for the first quarter of 2023 was 20.4%, slightly lower than the 22.6% recorded in the first quarter of 2022 and the 20.2% in the fourth quarter of 2022.
- Income from operations in the first quarter of 2023 was RMB405.2 million (USD 59.0 million), a notable improvement compared to the RMB413.1 million loss from operations in the first quarter of 2022 and the RMB133.6 million loss from operations in the fourth quarter of 2022.
- Net income for the first quarter of 2023 amounted to RMB933.8 million (USD 136.0 million), in stark contrast to the RMB10.9 million net loss in the first quarter of 2022 and reflecting a substantial increase of 252.0% from RMB265.3 million net income in the fourth quarter of 2022. Non-GAAP net income for the first quarter of 2023 reached RMB1.41 billion (USD 205.9 million), indicating a significant increase of 196.4% compared to RMB477.1 million in the first quarter of 2022 and a 46.1% increase from RMB967.6 million in the fourth quarter of 2022.
- Net cash provided by operating activities in the first quarter of 2023 was RMB7.78 billion (USD 1.13 billion), reflecting a substantial increase of 324.3% compared to RMB1.83 billion in the first quarter of 2022 and a 58.0% increase from RMB4.93 billion in the fourth quarter of 2022. Free cash flow for the first quarter of 2023 amounted to RMB6.70 billion (USD 975.9 million), a significant increase of 105.8% compared to RMB502.0 million in the first quarter of 2022 and a 105.8% increase from RMB3.26 billion in the fourth quarter of 2022.
Technical Observation (on the daily chart)
The price of LI stock has shown a consistent upward trend since making its 52-week low on October 24, 2022, with a gain of approximately 151.56%. In the past one year, the stock has generated only a mere return of 4.08%. Since the latest results announcement, the LI share price has provided a return of around 25.83%. Currently, the stock is currently near an important resistance of USD 34.00-USD 36.00. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 65.93, taking some rejection from overbought zone, with an expectation of some consolidation or a short-term correction before the continuation of the upward trends. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.
As per the above-mentioned price action, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given Li Auto Inc (NASDAQ: LI) at the closing price of USD 31.15 as of June 12, 2023.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The reference date for all price data, currency, technical indicators, support, and resistance levels is June 12, 2023. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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