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Li Auto Crushes Delivery Guidance. The Chinese EV Sector Remains Hot.

The Li Xiang One PHEV

Courtesy of Li Auto Inc.

Li Auto, like its electrical vehicle peers NIO and Tesla, had a very strongfinish to the year. The Chinese EV sector remains on fire rolling into 2021.

The Chinese maker of the Li ONE SUV delivered 6,126 vehicles in December. That up from 4,646 in November and up about 530% compared with December 2019, according to the company.

It can be a little hard to get a consensus delivery number for Li Auto (ticker: LI) and other Chinese EV producers. Most of the analysts are based in Asia and aggregating a consensus is difficult. Tesla (TSLA), for instance, delivered more than 180,000 vehicles in the fourth quarter, which was better than the roughly 176,000 analysts projected.

Still, the Li number is very strong, even without a true analyst consensus for comparison. The company, on its third quarter conference call, said it expected to deliver 11,000 to 12,000 vehicles in the fourth quarter. The company ended up delivering 14,464 in the fourth quarter, easily beating its own initial projections.

NIO (NIO) delivered more than 7,000 vehicles in December. Combined with Tesla and Li results, it appears Chinese EV demand remains very healthy. XPeng (XPEV), the other U.S. listed Chinese EV producer, hasn’t released December deliveries yet.

Calling the stock price reacting to even good news can be hard sometimes. Li stock dropped after reporting November deliveries. Li also sold more stock to raise cash around the time November deliveries were announced.

EV stocks are definitely in a bull market. Tesla rose about 740% in 2020 and is now the world’s most valuable car company by a wide margin. Li stock closed 2020 at $28.83, up substantially from it’s July $11.50 IPO price.

The gains make Li, and the Chinese EV sector as a whole, expensive. Barron’s recently wrote that Chinese EV stocks were too pricey for us. That article appeared in mid-December, and the Chinese EV stocks, on average, trade about where they did back then.

Analysts, for the most part, disagree with Barron’s. More than 60% of analysts rate the three Chinese EV stocks—NIO, Li and XPeng—Buy. The average Buy rating ratio for stocks in the Dow Jones Industrial Average is about 57%.

For Li, about 64% of analysts covering the company rate share Buy. The average analyst price target is about $37 a share.

Monday should be an interesting day. Investors have Tesla’s recent Model Y pricing in China to deal with. A Model Y is priced below a NIO EC6 and right around the price of a Li ONE.

That might be a concern for investors, but the delivery numbers look good.

Write to Al Root at [email protected]

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