The company's recent situation
Recently, we visited Xiaopeng Motor's Zhaoqing Intelligent Connectivity Technology Industrial Park for research and had exchanges with the company.
reviews
The Industry 4.0 factory produces all models, and the industrial cluster is beginning to take shape. The Xiaopeng Zhaoqing factory we visited this time is currently the company's only production base. It has achieved flexible production of the P7, P5, and G3i models.
The Zhaoqing factory is a digital smart factory built according to Industry 4.0 standards. It has five major process workshops for stamping, welding, painting, assembly and battery packing. Through the application of IoT technology and digital systems, production information, equipment information, process and quality information can be visualized, making the factory's intelligence and automation reach an industry-leading level. The new energy vehicle industry cluster in the Zhaoqing High-tech Zone surrounding the base is beginning to take shape. Not only will it have an open road test license for autonomous driving, but core supply chain enterprises such as Ningde Era will also settle in later, opening up the entire smart electric vehicle industry chain and empowering the development of Xiaopeng Motor.
Production and sales are booming rapidly, and the performance of new products can be expected. Currently, the company's production and sales are booming, and the momentum is excellent. On the production side, the Zhaoqing factory has achieved double-shift high-load production, and production capacity continues to climb; on the demand side, the company's monthly sales have repeatedly reached new highs and reached over 10,000 in September. We determine that with the subsequent delivery of new models, delivery volume will increase rapidly in the fourth quarter. Among them, the new model Xiaopeng P5, as the first mass-produced electric model equipped with lidar, continues its intelligent advantage and will begin large-scale delivery in October, becoming an important driving force for the company to achieve the planned monthly sales target of 15,000. Looking ahead, the medium to large pure SUV products that the company plans to launch in 2022 will also enrich the company's product matrix and drive sales growth.
Software and hardware full stack self-research, rapid iteration, consolidation and expansion of advantages. The market has given high recognition to the company's software development capabilities. Its full-stack self-developed xPilot 3.0 intelligent driving system has market-leading functional experience, and also has a significantly higher penetration rate than Tesla FSD. However, the company also has strong self-development capabilities in terms of hardware, such as next-generation electronic and electrical architectures and domain controllers. We believe that the full-stack self-research capability combining software and hardware will enable the company to have a market-leading product iteration speed, consolidate and expand technological advantages, and increase sales volume accordingly. At the same time, the lower marginal cost of software will also drive the company's profitability. We believe the above factors can cause a big difference in expectations for the company's subsequent sales volume and profit level.
Valuation and advice
We raised the company's 2021/22 sales forecast to 990,000 units, corresponding to the increase in the company's 2021/22 revenue forecast of 14.2%/30.6% to 197.8/4042 billion yuan; due to increased investment in intelligent R&D and expansion of sales channels, the corresponding reduction in the company's net profit to the mother in 2021/22 was reduced from -41.3/-3.29 billion yuan to 5.889/32 billion yuan. The current stock price corresponds to 5.6 times EV/revenue in 2022, and we have maintained our outperforming industry rating. The company was given an EV/revenue valuation of 8 times in 2022, corresponding to a 9%/9% increase in US stocks/Hong Kong stocks to 60 US dollars/HK$235. There is room for an increase of 39%/38% from the current stock price, respectively.
risks
The chip shortage affected production and sales; the launch of new products fell short of expectations.