Can LI still be regarded as a new force to build cars？ Last year’s net profit was about 1.7 times that of the Great Wall.
[Wen/Caiquan Society & Dao Ge said Che Ma Jian Yu] Is the word "new force for making cars" still suitable for describing LI?
On the evening of February 26th, LI released its financial report for the fourth quarter and the whole year of 2023. In 2023, LI achieved revenue of 123.85 billion yuan, up by 173.5% year-on-year, becoming the first new car company in China with annual revenue exceeding 100 billion yuan. At the same time, the annual net profit in 2023 reached 11.81 billion yuan, achieving annual profit since delivery, and becoming the third profitable new energy vehicle enterprise after Tesla and BYD.
It is noteworthy that, from the perspective of revenue and profit indicators, LI may no longer be viewed from the perspective of the new forces that build cars. According to the 2023 performance report issued by Great Wall Motor, the total revenue of Great Wall Motor in 2023 is 173.41 billion yuan, and its net profit is 7.01 billion yuan. By comparison, LI’s performance has been at the same level as that of the old car company Great Wall Bus Station, and even only compared with the profit, LI is about 1.7 times that of Great Wall Motor.
LI said that the "best financial performance in history" benefited from the rapid expansion of scale and the continuous improvement of operating efficiency. "The remarkable growth of scale, the deepening of research and development, and the continuous improvement of operating efficiency have promoted us to achieve the best financial performance in history in 2023, and laid a solid foundation for LI to step into 2024 with richer product matrix and more diversified market demand", Li Xiang, founder of LI, said in the earnings conference call that according to LI’s plan, 2024 will be the product year of LI!
The victory of economies of scale! Ideal first profit, gross profit exceeds Tesla
LI attributed the best financial performance in history to the rapid expansion of scale. Judging from the financial report data, most of LI’s revenue comes from vehicle sales, and its vehicle sales revenue in 2023 is 120.29 billion yuan. Considering the delivery volume of LI in 2023, the increase of ideal vehicle sales revenue is mainly due to the increase of vehicle delivery volume.
"In 2023, when the competition in the new energy vehicle market was fierce, LI achieved excellent results with three L-series models, and the annual delivery increased by 182.2% year-on-year to 376,000 vehicles, becoming the sales champion of new energy vehicles with a price of over 300,000 yuan in China market," said Li Xiang.
Other sales and service income of LI in 2023 was 3.56 billion yuan, an increase of 201.3% compared with 1.18 billion yuan in 2022. It is also inseparable from the increase in vehicle delivery. It is reported that the increase in other sales and service income is mainly due to the increase in vehicle delivery, which makes the sales of charging piles increase, and the increase in cumulative vehicle sales makes the sales of accessories and services increase.
It is worth mentioning that the growth of delivery volume may also make LI’s gross profit margin better guaranteed. Since the fourth quarter of 2023, LI has started the product renewal transition ahead of schedule through price concessions. However, in this context, LI’s gross profit margin is still improving. The data shows that LI’s gross profit margin continued to increase in the quarter of 2023, with four quarters of 20.4%, 21.8%, 22.0% and 23.5% respectively. In 2023, the gross profit margin reached 22.2%, which also exceeded Tesla’s 18.2%.
Li Xiang once said: "The gross profit margin of products is much lower than expected, and the gross profit margin fluctuates greatly. It is not the conscience of enterprises to price, but the need to improve the operation and management of enterprises and continuously expand their scale." Obviously, the scale benefit of the automobile industry has been verified again.
Hurricane 2024 Li wants to reiterate the goal of 800,000 vehicles
The new high performance in 2023 gave LI the confidence to continue soaring. Li Xiang said, "We will challenge to deliver 800,000 vehicles a year".
Looking forward to the first quarter of 2024, LI expects to deliver 100,000-103,000 vehicles, up 90.2%-95.9% year-on-year.
However, LI’s sales forecast in the first quarter of this year is not optimistic. In January this year, LI delivered about 31,200 vehicles, down 38.1% from the previous month. However, due to the Spring Festival holiday in February, there were only 10,100 vehicles on February 18. In other words, in the remaining time, the sales volume of LI will reach 58,700-61,700 vehicles, so as to complete the first quarter forecast.
Of course, 2024 is a big year for LI’s products, and its new products may also help achieve the sales target in the first quarter. According to the latest news from LI, MEGA, LI’s flagship MPV model, and 2024 Ideal L7/L8/L9 will be launched on March 1st, among which MEGA has created a brilliant record that the order volume exceeded 10,000 vehicles in just one hour and 42 minutes.
In addition, the Ideal L6 will also be launched in the second quarter of this year, which will become the lowest-priced product of LI. Li Xiang also revealed that in order to grab more market share, LI will release three pure electric products in the second half of this year. With the help of the so-called "Product Year", LI is also full of confidence for the whole year of 2024. Zou Liangjun, senior vice president of sales and service in LI, said that LI expects its delivery volume to exceed 50,000 vehicles in March. By June, LI will reach the milestone of monthly delivery of 70,000 vehicles.
In view of the recent fiery "going out to sea", LI will also accelerate its layout this year. According to previous reports, it is currently recruiting sales and service teams in Dubai to speed up the construction of sales, service network and supply chain, and will begin to deliver in overseas markets in the first quarter of this year.