Li Auto (HKG: 2015) (NASDAQ: LI) shares are up 11% in Hong Kong this morning. It’s possible that this is just a delayed reaction to the October shipping numbers they released last week. We talked about that when discussing Xpeng: “But then comes the surprise about October sales. “Chinese electric vehicle maker, XPeng (NYSE:XPEV) released their October 2023 vehicle delivery report on Wednesday, announcing the company’s Smart EV monthly deliveries reached a record high of 20,002 units, representing a 31% increase over the prior month and a 292% increase year-over-year.” Li Auto also shows encouraging signs: “Li Auto’s monthly deliveries remained far ahead of its immediate peers at 40,422 cars in October. The company’s currently available cars are not purely battery-powered since they come with a fuel tank for extending the battery’s driving range. Nio said it delivered 16,074 cars in October, up slightly from the prior month but below the 20,462 vehicle deliveries reported for July.””
However, we think that this rise today is more probably related to the upcoming results.
Li Auto share price from Google Finance
As is pointed out: “Those figures won’t make it into the financial statement when LI reports Q3 earnings next week (Thursday, Nov 9th, before the market opens) but they certainly will be pleasing for investors, particularly as fears of growing competition have come to the fore recently. This is a fact acknowledged by Deutsche Bank analyst Edison Yu. “While demand for Li Auto’s premium EREV SUVs has remained robust, investor concerns around competition have increased especially around Huawei-backed AITO,” Yu explained. “Combined with already high volume expectations, we see some room to disappoint going forward especially around the upcoming BEVs where pricing will start quite high.”
Don’t forget that actual corporate numbers are always backward looking - they are the measure of what has happened. The value of a share is always what will happen - past results are only a guide to what will happen. So the biggest influence on the price from the results is likely to be what the guidance for the coming year is going to be. We already know from those Oct numbers that it’s likely to be pretty good, that guidance, but how good is it going to be?
The share price rise now is building in some considerable hope valuation. So, unless those forecasts are truly blow out we might expect to see a fall back on the announcement of the actual numbers. Buy the rumour sell the fact yet again maybe?
