Li Auto's Fundamentals Look Strong Amid Market Skepticism: ROE Analysis

Li Auto's ROE is 11%, which is higher than the industry average of 7.1%. This has contributed to the company's 72% net income growth over the past five years. With a low payout ratio and efficient management, Li Auto's growth is impressive, especially when compared to the industry average of 10%.

Li Auto Inc. (2015.HK), a leading Chinese electric vehicle (EV) manufacturer, has reported significant financial achievements, particularly in terms of return on equity (ROE) and net income growth. According to recent data, Li Auto's ROE stands at 11%, which is notably higher than the industry average of 7.1%. This strong financial performance has contributed to the company's 72% net income growth over the past five years [1].

The company's success can be attributed to several factors. Firstly, Li Auto's efficient management and cost control strategies have allowed it to maintain a robust gross profit margin of 20.5% and a vehicle margin of 19.8% [2]. Secondly, the company's strategic product launches, such as the Li MEGA Home and Li L Series, have driven demand and market leadership. As of April 2025, Li Auto maintained a 14.1% market share in the RMB 200,000 and above NEV segment in China [2].

Li Auto's growth is also underpinned by its strong financial health. The company has a solid balance sheet with a healthy equity base and a moderate debt-to-equity ratio. Its efficient cash flow generation, despite significant investing cash outflows, indicates strong operational efficiency and financial stability [2].

Moreover, Li Auto's expansion of its supercharging network and upcoming BEV models are strategic moves to sustain growth and market competitiveness. The company operates 2,350 supercharging stations and plans to increase this number to 4,000 by the end of the year [2].

In conclusion, Li Auto's impressive financial performance, driven by its high ROE and net income growth, positions it as a strong player in the EV market. The company's efficient management, strategic product launches, and robust financial health are key factors contributing to its growth.

References:
[1] https://www.reuters.com/markets/emerging/chinas-li-auto-consolidates-electric-suv-lineup-one-week-after-launch-2025-08-05/
[2] https://www.tipranks.com/stocks/li/stock-analysis