UOB Kay Hian
Date of Report: 20 August 2025

XPeng Inc Surges Ahead: Earnings Beat, Turnaround in Sight with Aggressive Expansion and New Model Launches

Executive Summary

XPeng Inc (9868 HK) delivered a standout second quarter in 2025, surpassing expectations with strong top-line growth, a significant narrowing of losses, and a clear roadmap for profitability. The company is poised for a dramatic turnaround, driven by robust product cycles, new model launches, and aggressive international expansion. UOB Kay Hian maintains a BUY rating with a bold target price of HK\$150.00, representing an impressive 94.7% upside from current levels.

Company Snapshot

– Sector: Automobile
– Current Share Price: HK\$77.05
– Target Price: HK\$150.00
– Market Cap: HK\$145.4bn (US\$18.6bn)
– Major Shareholder: Mr. He Xiaopeng (20.4%)
– 52-Week High/Low: HK\$106.00 / HK\$26.00
– 2025 NAV/Share: RMB 14.6
– 2025 Net Cash/Share: RMB 13.6
– GICS Sector: Automobile
– Bloomberg Ticker: 9868 HK

2Q25 Results: Strong Growth and Margin Expansion

XPeng’s Q2 2025 performance exceeded forecasts, marked by explosive revenue growth, substantial margin improvement, and a record-low net loss.

Key Financial Metrics and Outlook

XPeng’s financial turnaround is gaining traction. Major highlights include:

• Revenue: 2Q25 revenue was RMB 18.27bn, up 125% YoY and 16% QoQ, beating both company guidance and consensus.
• Gross Margin: Record high of 17.3%, up 3.3ppt YoY and 1.8ppt QoQ, thanks to improved economies of scale.
• Net Loss: Narrowed to RMB 478m, a 63% YoY and 28% QoQ improvement; better than consensus (RMB 850m loss) and internal estimates (RMB 600m loss).
• Operating Leverage: SG&A and R&D expense ratios dropped sharply as revenue scaled, with SG&A/revenue down 8.9ppt YoY to 11.9% and R&D/revenue down 8.1ppt YoY to 12.1%.
• Deliveries: 103,200 units in 2Q25, up 242% YoY, led by affordable models Mona M03 and P7+.
• ASP: Average selling price dropped 27.5% YoY to RMB 164,000 due to a larger share of lower-priced models.

Strategic Drivers: New Model Launches and Global Expansion

1. Product Innovation and Launches

• XPeng G7, a mid-sized electric SUV (Rmb195,800-225,800), launched July, targeting family buyers. Offers up to 702 km range, 800V fast-charging, AR-HUD, and smart XNGP technology. Weekly deliveries at 2,000-3,000 units; monthly volumes expected to exceed 10,000 and will contribute over 20% of total deliveries.
• Next-gen P7 luxury coupe (Rmb300,000) scheduled for 3Q25 launch. Over 30,000 pre-orders in 48 hours post-unveiling. Features AR-HUD navigation and a premium interior by Rafik Ferrag. Projected to contribute ~10,000 monthly sales, about 20% of total.
• G01 EREV SUV (Rmb250,000-300,000) to debut in 4Q25. Aimed at premium SUV buyers, offering 200km EV and 1,200km extended range, XPILOT 4.0, and 800V fast charging.

2. International Expansion

• Focus on Europe (UK) and Southeast Asia (Indonesia), with further plans for Latin America and other Asian markets.
• Sales coverage to double from 30 to 60 countries in 2025, including 300 new service stations.

Guidance and Delivery Targets

– 2025 Deliveries: Company targets to double YoY to 380,000 units.
– 3Q25 Guidance: Deliveries of 113,000-118,000 units (+143-154% YoY), revenue between RMB 19.6bn-21.0bn (+94-108% YoY).
– Profitability: Gross margin is expected to rise further with premium model sales and scale efficiencies.
– 2025-2027 Delivery Forecasts: 400,000 / 500,000 / 650,000 units respectively (implying a 51% three-year CAGR).
– ASP Assumptions: RMB 186,000 / 181,000 / 175,000 for 2025-2027.
– Gross Margin Assumptions: 15.9% / 17.2% / 18.3% for 2025-2027.

Profitability Outlook and Valuation

– 2025 Net Loss: RMB 1,591m expected, unchanged from prior forecasts.
– 2026-2027 Net Profit: RMB 1,098m and RMB 5,273m, respectively. Company expected to break even in Q4 2025 and turn profitable from Q1 2026.
– Target Price: HK\$150.00, based on 10-year DCF (WACC: 11%, terminal growth: 4%), implying 50x 2027 PE and 2.4x 2027 P/S.
– Recommendation: Maintain BUY. XPeng is at a key inflection point, entering a turnaround phase supported by a strong product pipeline.

Share Price Catalysts

• Upbeat weekly and monthly sales data
• Strong order flows for new models
• Continued positive quarterly results

Detailed Financial Projections

Cash Flow and Balance Sheet Highlights

• Operating cash flow projected to turn positive in 2025 (RMB 2,922m), rising sharply to RMB 14,490m in 2027.
• Capital expenditure to remain elevated, with annual capex at RMB 5,000m from 2025-2027.
• Net cash position robust with ending cash and cash equivalents expected to reach RMB 57,880m by 2027.
• Debt to equity ratio expected to rise but remain manageable as leverage supports growth and expansion.

Conclusion: XPeng at an Inflection Point

XPeng’s exceptional revenue growth, expanding margins, and narrowing losses position it at a critical inflection point. Backed by a powerful new product cycle, aggressive overseas expansion, and improving cost structure, the company is on track for a significant turnaround. With a compelling upside, XPeng stands out as a top turnaround candidate in the rapidly evolving electric vehicle sector. Investors should watch for continued execution on sales, model launches, and international reach as near-term catalysts.