China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

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[Li Auto (LI US, BUY, TP US$40) Earnings Preview]: Riding Intact Model Cycle in 2023

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China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>Li Auto reported 4Q22 top line in line, and bottom line beating consensus and our estimate, thanks to recovered vehicle margin and improved SG&amp;A efficiency. </li>
<li>We reiterate Li Auto as our top pick, because of 1) positive growth outlook in 2023 driven by intact model cycle (L9/L8/L7); </li>
<li>2) margin upside in 2023 driven by expanded scale economy and sharing of auto parts among its product line-ups; and 3) less impacted by Tesla’s price war.</li>
</ul>


Li Auto reported 4Q22 top line in line, and bottom line beating consensus and our estimate, thanks to recovered vehicle margin and improved SG&amp;A efficiency. 
We reiterate Li Auto as our top pick, because of 1) positive growth outlook in 2023 driven by intact model cycle (L9/L8/L7); 
2) margin upside in 2023 driven by expanded scale economy and sharing of auto parts among its product line-ups; and 3) less impacted by Tesla’s price war.


[Li Auto Inc. (LI US) Earnings Review]: Intact Model Cycle Drives Growth in 2023