Growth to Resume Next Year for XPeng With New Models; Shares Undervalued

XPeng delivered in line third-quarter revenue which is near the low end of company’s guidance. With enlarged losses on softer vehicle margin and rising operating expense levels, we increase our net loss forecast for 2022-2024. As a result, our fair value estimate is cut to USD 18 per ADS (HKD 71 per share) from USD 33 per ADS (HKD 130 per share), which implies a forward 2023 price/sales ratio of 2.1 times. Despite a 47% rally in the ADR price overnight with investors looking ahead to 2023, we still think Xpeng is undervalued.