US-listed Chinese electric car companies Nio, Xpeng and Li Auto saw deliveries for the month of April, amid the outbreak of the Covid-19 virus in multiple regions in China since late March, leading to supply chain, manufacturing and transportation disruptions. For example, Nio (NYSE:NIO) saw April deliveries drop to 5,074 units, down from about 10,000 units in March and about 7,100 units in April 2021, as the company temporarily halted production at its Hefei plant. . Li Auto saw the largest sequential decline, with deliveries dropping to 4,167 vehicles in April, down from about 11,000 in March, and about 5,500 in April 2021. Xpeng saw the smallest impact of the three, with deliveries dropping to 9,002 units in April, from about 15,000. vehicle in March, although up from about 5,000 units in April 2021.
All three stocks were nearly flat in pre-market trading on Monday, which likely indicates that the tough delivery numbers are already priced in. However, the shares have taken a beating so far in 2022 amid regulatory concerns regarding the listing of Chinese stocks in the United States. Markets and rising interest rates, reducing the premium investors are willing to pay for developing stocks. For example, Nio and Xpeng’s shares are down nearly 50% since the beginning of the year, while Li Auto’s is down 30%.
After the sale, the three companies are now trading at less than 3 times their forecast revenue for 2022, which we think is an attractive valuation given their above-average growth rates and gross margins. Even with the temporary downturn in April, to date delivery growth has remained flat for the three companies. For example, Nio shipments for the first four months of 2022 increased 13% over last year, Li grew deliveries by 96%, and Xpeng expanded deliveries by about 135%. There are signs that Covid-19 cases are flattening in China, which means production should rebound in the coming quarters. Furthermore, the regulatory burden on US-listed Chinese stocks could ease with reports that China’s securities regulator has been relaxing audit rules while making audit reports on China Dynamics Interactions (ADR) available to US regulators.
Check out our analysis at Nio and Xpeng & Li Auto: How do Chinese EV stocks compare? For more details on how NIO stocks stack up against their peers.
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