Second-quarter results from Chinese electric-vehicle maker
Li Auto
topped Wall Street Expectations. What’s more, profit margins topped EV leader
Tesla.
Li (ticker: LI) American depositary receipts are falling in early trading Tuesday, anyway. Investors looked to be taking profits after a sharp rally in its ADRs this year. Still, numbers from the Chinese EV maker are a good sign for the industry.
Tuesday morning, Li reported earnings of of 19 cents per Hong Kong-listed share on sales of $4 billion in the June quarter. (Earnings per ADR, came in at 38 cents, as each ADR represents two Li shares.)
Wall Street had expected earnings of 12 cents per share on sales of $3.8 billion. A year ago, Li lost 2 cents per share on sales of $1.2 billion.
Gross-profit margins came in at 21.8%, up from 21.5% in the second quarter of 2022. Li’s second-quarter margin even topped Tesla (TSLA). Second-quarter gross-profit margin from Elon Musk’s company came in at 18.2% in the second quarter, down from 25% a year ago.
Looking ahead, Li said it expects third-quarter deliveries of 100,000 to 103,000. Total vehicle deliveries in the second quarter came to 86,533 units, compared with 52,584 in the first quarter of the year.
Li delivered a record 34,134 vehicles in July, the first month of the third quarter. Wall Street is looking for something north of 90,000 for the full quarter.
Li looks to have turned the quarter of scale and profitability. This is the third consecutive quarterly profit and Wall Street projects positive earnings for coming quarters as well. Tesla was consistently profitable when it started shipping roughly 100,000 units a quarter.
Results look solid but shares are down 3.7% in overseas trading. U.S.-listed ADRs are off 2.9% in premarket trading.
S&P 500
and
Nasdaq Composite
are both down about 0.5%. Profit-taking is one reason for the drop. Coming into the earnings report, Li’s ADRs had gained about 130% year to date.
Still, results, and especially delivery guidance, should be enough to keep investors optimistic about Chinese EV sales. That’s a positive for Li, Tesla,
BYD
(1211.Hong Kong), and other EV makers that sell cars in the world’s largest market for new cars and new EVs.
Deliveries of 100,000 would be up roughly 16%. If the industry was up 5% sequentially, battery-EV sales would be up roughly 10% year over year in China.
Industrywide battery-EV sales rose roughly 10% from a year earlier in the first quarter and then rose roughly 40% year over year in the second quarter, bouncing back off Covid lockdown-induced lows.
Guidance and earnings will be discussed when management hosts a conference call at 8 a.m. Eastern time.
Write to Al Root at [email protected]
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