Li Auto: Hybrids Bridge The Gap Toward EVs, Boosting Profit Margins

Summary

• LI has delivered another quarter of excellent profitable growth, with growing automotive profit margins despite the lower ASPs, implying its improved manufacturing/ operating scale.
• The automaker is also set to record an impressive 375.67K delivered units in FY2023 (+181.9% YoY), beating its previous two guidances, despite the ongoing price war in China.
• The LI management already targets 1.6M annualized deliveries by 2025, expanding at an impressive CAGR of +62.09% from current levels.
• We maintain our conviction that the management has been highly competent in bridging the gap between ICE and EV demand in China with its PHEV offerings.
• Combined with its growing cash hoard, LI remains a Buy for investors seeking high growth PHEV/ EV stocks, preferably at its previous support levels of $28s for an improved margin of safety.

Tomwang112

We previously covered Li Auto (NASDAQ:LI) in October 2023, discussing its excellent prospects, given the robust consumer demand for its offerings despite the uncertain domestic economy and ongoing price war.

We had attributed this success to the management's prudent choice

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