$Li Auto(LI.US)$ yesterday reported solid first-quarter revenue of RMB 9.56 billion ($1.51 billion), but guidance for the second quarter was somewhat soft.

$Li Auto-W(02015.HK)$ surges over 9% today.

$Deutsche Bank(DB.US)$ analyst Edison Yu's team then provided their first look. Here is what the team sent to investors on Monday:

Li Auto reported solid 1Q results while 2Q guidance was somewhat soft given uncertainty around the COVID recovery cadence.

Deliveries were previously reported at 31,716 units, leading to revenue of 9.56bn RMB (vs. our 9.60bn forecast and consensus at 9.58bn).

Total gross margin of 22.6% came in above our 21.1% estimate (consensus at 21.3%), boosted by higher vehicle margin of 22.5% vs. our 21.0% forecast. Opex of 2,577m was roughly in-line with our/consensus expectations.

All together, adjusted EPS of 0.47 came in materially above our 0.05 estimate due to higher other income and also benefitted from higher stock comp which is added back (nearly 200m higher).

Free cash flow of 502m was materially stronger than anticipated despite higher capex, likely supported by robust working capital performance.

Management provided somewhat soft guidance for 2Q22 calling for 21,000-24,000 deliveries vs. our 23,500 forecast at the midpoint. Management indicated production has continued to improve since early April but the supply chain remains under pressure. Revenue is expected to be 6.62-7.04bn vs. our 7.21bn forecast.

For the full year, factoring in the impact of lost production volume from COVID, gross margin should still be at least flat YoY or better. R&D is targeted to be around 7bn RMB and SG&A as % of sales ought to be similar to 2021.

The upcoming new L9 EREV full-size SUV should be unveiled toward end of this month of early June depending on COVID situation. Deliveries are still expected to occur in 3Q.