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What’s happening: Shares of Li Auto rose sharply on Monday, after the company released results for its fourth quarter.
What happened: The Chinese electric vehicle maker posted stronger-than-expected earnings for its latest quarter.
Li Auto also said it expects a steep increase in vehicle deliveries in the first quarter.
How were the results: The Chinese EV maker posted a record high quarterly profit.
Why it matters: Auto sales in China are typically weak in the January-February period, with sales peaking towards the end of the year. The Lunar New Year holiday has a big impact on overall vehicle production and sales in China.
Li Auto’s vehicle sales climbed 133.8% to $5.69 billion, following an increase in vehicle deliveries. Total vehicle deliveries jumped 184.6% year-over-year to 131,805 units last quarter.
The company delivered 31,165 vehicles during January, up 105.8% from the year-ago month.
Its vehicle margins expanded by 270 basis points (bps) year-over-year to 22.7%, while gross margins rose by 330 bps to 23.5%. Adjusted income from operations rose sharply by 579.3% year-over-year to $544.1 million.
“Full-year deliveries grew by 182.2%, reaching 376,030 vehicles, making us the best-selling brand among NEVs priced above RMB300,000 in China. In December, we released the OTA version 5.0 for Li L series,” CEO Mr. Xiang Li said during the earnings call.
Management guided to revenues of $4.40 billion to $4.53 billion for the first quarter, representing 66.3% to 71.3% year-over-year growth. The company also projected vehicle deliveries of 100,000 to 103,000 for the quarter, representing a jump of 90.2% to 95.9% year-over-year.
How shares responded: Li Auto’s shares climbed 18.8% to close at $41.34 on the US stock exchange on Monday. The stock has added around 49% over the past month.
What to watch: Investors will continue monitoring monthly vehicle sales by the company. Li Auto is scheduled to report February sales results on March 1.
Markets will also watch the automaker’s upcoming launches. Li Auto will formally launch the Mega MPV, its first fully battery electric vehicle on March 1, and is set to unveil 2024 versions of the L7, L8 and L9. The company is also looking to launch three more BEV models during the second half of the year.
Context: Oil prices moved higher on Monday as investors monitored ongoing geopolitical concerns.
Details: Crude oil prices have been hovering in a range of $70 to $90 per barrel since November 2023 with several factors, including US production and weakness in the Chinese economy, playing a key role in determining demand and supply.
There has been a sharp decline in US refining activity and further disruptions to global trade, leading to tighter diesel supplies and impacting US diesel export to Europe.
Investors also continued assessing the geopolitical environment, as this has a meaningful impact on the oil market.
Some weakness in the US dollar also lent support to oil prices on Monday as this makes commodities priced in the greenback cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.1% to 103.83 on Monday.
Brent crude for April delivery added 91 cents to close at $82.53 per barrel, while US WTI crude oil for April delivery gained $1.09 to settle at $77.58 per barrel on Monday.
In other energy trading, wholesale gasoline for March delivery gained 3 cents to $2.31 a gallon, while March heating oil climbed 7 cents to $2.76 a gallon and March natural gas added 6 cents to $1.66 per 1,000 cubic feet.
What to watch: Investors await the release of API’s data on US crude stockpiles, which increased by 7.168 million barrels in the week ended February 16, 2024, following an increase of 8.52 million barrels in the prior week.
Other Markets: European indices closed mostly lower on Monday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index down by 0.29%, 0.46% and 0.37%, respectively, and the DAX 40 up by 0.02%.
French President Emmanuel Macron said that he was prepared to “do everything” possible to ensure Russia “does not prevail” and had not ruled out sending ground troops to help Ukraine. The news sent the safe-haven US dollar index slightly lower in forex trading this morning.
Japan’s annual inflation rate eased to 2.2% in January, from 2.6% in the previous month. This being the lowest reading since March 2022 lent support to the JPY/USD forex pair.
US sales of new single-family houses grew by 1.5% an annualised rate of 661,000 in January. This came in short of market estimates of 680,000 and sent the Nasdaq 100 lower on Monday.
The Bank of Israel held the policy rate at 4.5%, after announcing a 25 basis point cut in the prior meeting, which exerted pressure on the ILS/USD forex pair.
Canada’s wholesale sales fell by 0.6% in January, following a 0.3% rise in the earlier month, which sent the CAD/USD pair lower in forex trading this morning.
Germany’s GfK consumer climate indicator, France’s consumer confidence indicator, unemployed persons and initial jobless claims, Eurozone’s loans to non-financial corporations, bank lending to households and money supply M3, Russia’s monetary policy report, Brazil’s consumer price inflation, Mexico’s balance of trade, US durable goods orders, Redbook index, S&P CoreLogic Case-Shiller 20-city home price index, FHFA house price index, CB Consumer Confidence, Richmond Fed manufacturing index, Richmond Fed services index, Dallas Fed general business activity index and API crude oil stock change, as well as Argentina’s retail sales.
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