Date: 26 September 2024
Broker: UOB Kay Hian (Hong Kong) Limited

1. Company Overview

XPeng Inc. (stock code: 9868 HK) is a Chinese electric vehicle (EV) manufacturer known for producing smart EVs targeting the mid-to-high-end market. The company is a prominent player in China’s highly competitive EV sector, focused on innovation and intelligent technology in electric vehicles.

2. Sales Performance (38th Week of 2024)

• Insurance Registrations: XPeng recorded 3,500 units in the 38th week of 2024. This represents a 3% year-on-year decline, a 25% month-on-month increase, but a 17% week-on-week drop.
• Cumulative Sales: For the first 38 weeks of 2024, XPeng’s cumulative insurance registrations reached 82,000 units.

3. 2024 Delivery Targets

• Estimated Deliveries: XPeng has set a delivery target of 280,000 units for 2024. However, UOB Kay Hian estimates XPeng’s 2024 deliveries to be around 200,000 units.

4. Market Strategy and Challenges

XPeng is moving down the price curve to penetrate the highly competitive mass-market segment. This move has led to lower margins, especially for models like the Mona M03, which sells at RMB 119,800 with a much lower gross margin than XPeng’s average.

XPeng faces stiff competition from both established incumbents, such as BYD, and newer entrants like Geely, which adds to the challenge of maintaining profitability and market share in the price-sensitive segments.

5. Financial Forecasts (2024-2026)

UOB Kay Hian maintains a cautious outlook for XPeng, projecting continued losses for the company over the next few years:

• 2024 Net Loss: RMB 7.80 billion
• 2025 Net Loss: RMB 6.13 billion
• 2026 Net Loss: RMB 5.22 billion

These forecasts are based on delivery estimates of 200,000 units in 2024, 230,000 units in 2025, and 280,000 units in 2026, factoring in sales contributions from the Mona M03 model.

6. Investment Outlook

Despite XPeng’s focus on increasing sales volume by entering the mass-market segment, the company continues to face significant challenges, including sustained losses and cash outflows. XPeng’s competitive position is under pressure from industry leaders, and the low-margin strategy may further strain profitability in the near term. As a result, UOB Kay Hian maintains a SELL rating on the stock.