Company Reports

XPeng reported fourth-quarter revenue at the midpoint of its guidance. Thanks to lower battery costs and larger volume, vehicle margin recovered to 4% from negative margins in the first three quarters last year. The improvement in margin was stronger than we expected, given the continued pressure from price promotions amid industry competition. Management guided that the company’s cost reduction initiatives will continue to yield a positive margin impact in 2024. With higher operating expense assumptions, we slightly increase our net loss forecasts for 2024-25. However, we maintain our fair value estimate at USD 15.90 per ADS (HKD 61.70 per share), which implies a forward 2024 price/sales ratio of 2 times. Shares are in Morningstar 4-star territory and undervalued, in our view.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing six pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; G9 midsize SUV; G6 compact SUV, and X9 multipurpose vehicle. Retail prices of the current model portfolio range from CNY 150,000 to CNY 420,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch at least 10 new cars in the next three years.

XPeng reported third-quarter revenue at the low end of its guidance. Excluding inventory write-off, vehicle margin of negative 3% indicates continued pressure from price promotions amid industry competition. But management guided a margin turnaround in the fourth quarter and meaningful improvement next year on larger volume, lower battery cost, and cost reduction initiatives that have been taken.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing five pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; G9 midsize SUV, and G6 compact SUV. Retail prices of the current model portfolio range from CNY 150,000 to CNY 350,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch 2-3 new cars each year from 2023 onward.

XPeng reported second-quarter revenue above the high end of its guidance. However, vehicle margin of negative 8.6% was much weaker than expected due to price promotions amid industry competition and inventory write-off. With enlarged losses on softer vehicle margin and rising operating expense ratios in the quarter compared with the prior-year period, we increase our 2023-24 net loss forecasts and delay our breakeven year forecast to 2026. As a result, we reduce our fair value estimate to USD 14.50 per ADS (HKD 56 per share) from USD 15.00 (HKD 58), which implies a forward 2024 price/sales ratio of 1.7 times. Shares are in Morningstar 3-star territory and fairly valued, in our view. We suggest investors wait for a better entry point to accumulate XPeng shares.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing five pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; G9 midsize SUV, and G6 compact SUV. Retail prices of the current model portfolio range from CNY 150,000 to CNY 350,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch 2-3 new cars each year from 2023 onward.

XPeng has announced that the company and the Volkswagen Group have entered into a framework agreement on strategic technical collaboration and a share purchase agreement where Volkswagen will subscribe to 4.99% of XPeng’s newly issued Class A ordinary shares for a total consideration of USD 700 million. We view the technology collaboration agreement and the fund-raising activity positively as it reinforces XPeng’s leadership in vehicle electrification and autonomous driving technology.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing four pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; and G9 midsize SUV. Retail prices of the current model portfolio range from CNY 150,000 to CNY 350,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch 2-3 new cars each year from 2023 onward.

No-moat XPeng’s first-quarter revenue was at the low end of its guidance. Vehicle margin of negative 2.5% was much weaker than we expected, due to price promotions amid industry competition. As it had announced delivery volume for the quarter in April, we believe the market has already priced in the disappointing quarter—the share price has fallen 22% since April. Still, we expect the disappointing second-quarter guidance to put extra pressure on XPeng's share price. With enlarged losses on softer vehicle margin and rising operating expense ratios, we increase our 2023-24 net loss forecasts. As a result, we reduce our fair value estimate to USD 12 per ADS (HKD 46.50 per share) from USD 15 (HKD 59.00), which implies a forward 2023 price/sales ratio of 2.4 times.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing four pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; and G9 midsize SUV. Retail prices of the current model portfolio range from CNY 150,000 to CNY 350,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch 2-3 new cars each year from 2023 onward.

XPeng reported fourth-quarter revenue near the high end of company’s guidance. As it already announced vehicle delivery for the quarter in January, we consider the result in line with market expectation. The main focus of investors this year is whether the company can resume delivery growth with new launches, in our view. With enlarged losses on softer vehicle margin and rising operating expense levels, we increase our net loss forecasts for 2023-24. As a result, we reduce our fair value estimate to USD 15 per ADS (HKD 59 per share) from USD 18 per ADS (HKD 71 per share), which implies a forward 2023 price/sales ratio of 2.2 times. Despite a 6% gain in the share price last Friday, we think XPeng is still undervalued.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing four pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; P5 compact sedan; and G9 midsize SUV. Retail prices of the current model portfolio range from CNY 150,000 to CNY 350,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch 2-3 new cars each year from 2023 onward.

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.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing three pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; and P5 compact sedan. Retail prices of the current model portfolio range from CNY 150,000 to CNY 300,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch a mid-to-large SUV G7 in the second half of 2022, with expected retail price of above CNY 300,000, and 2-3 new cars each year from 2023 onward.

XPeng delivered in-line second-quarter revenue which is close to the high end of company’s guidance. While management’s cautious outlook for the third-quarter vehicle delivery is likely to weigh on share price performance in the near term, we expect strong growth momentum to return in 2023 with full-year contribution of the new G9 sport utility vehicle and two additional launches. We reduce our fair value estimate to USD 33 per ADS (HKD 130 per share) from USD 40 (HKD 157). Our fair value implies a forward 2023 price/sales ratio of 2.8 times.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing three pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; and P5 compact sedan. Retail prices of the current model portfolio range from CNY 150,000 to CNY 300,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch a mid-to-large SUV G7 in the second half of 2022, with expected retail price of above CNY 300,000, and 2-3 new cars each year from 2023 onward.

We initiate coverage on XPeng with a no-moat rating and fair value estimate of USD 40 per ADS (HKD 157 per share). As a leading electric vehicle, or EV, manufacturer in China targeting the mass-market segment, XPeng will benefit from the vehicle electrification trend. Given significant growth opportunities, we forecast a 76.5% 2021-24 revenue CAGR with the first profitable year in 2025. Our fair value implies a forward 2023 price/sales ratio of 3.0 times.

XPeng is a leading electric vehicle, or EV, manufacturer in China, targeting the midrange to high-end segment and tech-savvy consumers. It is mass producing three pure electric models: the G3/G3i compact sport utility vehicle, or SUV; P7 midsize sedan; and P5 compact sedan. Retail prices of the current model portfolio range from CNY 150,000 to CNY 300,000 for popular trims, which offer a driving range of roughly 460-700 km. For its new model pipeline, XPeng plans to launch a mid-to-large SUV G7 in the second half of 2022, with expected retail price of above CNY 300,000, and 2-3 new cars each year from 2023 onward.