Li Auto: Deeply Discounted EV Growth Stock – Seeking Alpha

March 21, 2022 by No Comments

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Shares of Chinese electric vehicle startup Li Auto (NASDAQ:LI) dropped into a downtrend in 2021. Li Auto has emerged as one of the fastest growing Chinese EV companies and the firm overtook XPeng (XPEV) in February regarding delivery volume. The stock has become too cheap given the revenue opportunity in the EV sector and Li Auto still offers exceptional value in the EV space!

Li Auto: Pulling ahead of rivals

Delivery volumes in the first two months of the new year dropped off due to Chinese New Year falling into the sales period. February also has fewer trading days than other months which explains the steep drop-off in deliveries for the entire Chinese EV industry last month. However, Li Auto is still performing very well, given the circumstances.

Li Auto delivered 8,414 Li ONEs in February, showing 265.8% year over year growth. Compared to XPeng (XPEV) and NIO (NIO), Li Auto generated the fastest sales growth. XPeng grew deliveries 180% year over year while NIO’s growth rate dropped to just 9.9%.

Due to Chinese Holidays and a shorter trading month (and some COVID-19 related shutdowns in Suzhou), deliveries dropped off for Li Auto, but not as much as for its rivals: Li Auto’s deliveries fell 31% month over month while XPeng saw a delivery decline of 52% and NIO of 36% over the same period. Li Auto is now the fastest growing EV company in the industry group and deliveries are likely going to pick up in March again as business returns to normal for the Chinese electric vehicle industry.

Deliveries

December

Dec Y/Y Growth

January

Jan Y/Y Growth

February

Feb Y/Y Growth

LI

14,087

130.0%

12,268

128.1%

8,414

265.8%

XPEV

16,000

181.0%

12,922

115.0%

6,225

180.0%

NIO

10,489

49.7%

9,652

33.6%

6,131

9.9%

(Source: Author)

Get ready for a surge in deliveries

I expect a significant delivery rebound across the board in March, so all three Chinese EV companies stand to profit from a recovery in delivery volumes. XPeng will likely go back to delivering more than 10 thousand electric vehicles in the short term, and NIO is also likely to see a bounce towards 10 thousand deliveries monthly. Li Auto has the best recovery prospects, however, in part because the company has much simpler production lines as it produces only the Li One sport utility vehicle. Li Auto could deliver 15-20 thousand electric vehicles per month in FY 2022 and total deliveries could come close to 150 thousand for the entire year.

Sales growth has become too cheap

I like Li Auto not only because of its impressive delivery ramp but also because the company is expected to be profitable in 2022 which also puts it ahead of its rivals. Li Auto is expected to post its …….

Source: https://seekingalpha.com/article/4496796-li-auto-deeply-discounted-ev-growth-stock

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