Key points of investment:
After many rounds of full competition in the market, Xiaopeng Motor already has the ability to export a full range of models. At the same time, intelligence has become the company's brand influence label. The competitiveness of G6/P7i products is not inferior to competitors, G9/P5 expands the product matrix, and Mona/X9 explores new travel needs. Continued improvement of the product matrix is expected to lead to a continued increase in sales volume. At present, the company has completed in-depth cooperation with high-quality enterprises such as Ali, Didi, and Volkswagen. The intelligent driving ability and model export capability have all been recognized, and the company is expected to lead the industry in the subsequent wave of intelligence.
Intelligent upgrade, product power competition becomes the winner or loser of model sales
(1) For new car companies, we believe that the “0 to 1” breakthrough is the ability to export complete models, while the “1 to 10” success comes from the company's continuous focus, that is, the “focus” strategy continues to expand product advantages and achieve continuous brand deepening. (2) In terms of intelligent driving, advanced intelligent driving functions continue to advance, and urban NOA and AI chauffeur agents have become the key driving direction for car companies. At the same time, judging from consumers' demand for car purchases, intelligent functions have gradually become a core factor in consumers' car purchases. (3) The industry price war is expected to ease, and sales volume competition is expected to return to product power competition and new car cycle competition.
Leading intelligent driving, Xiaopeng has complete product export capabilities
With years of accumulation, Xiaopeng Motor has gradually opened up intelligent urban driving and AI chauffeur agency functions. Advanced intelligent driving functions have led the industry, and the intelligent driving function has catalyzed the market for a longer period of time. The cockpit space, power range, and chassis design are all rapidly iterating, and it is expected that various aspects of performance will be continuously optimized under the rocking architecture.
Family-style language design helps components to be consistent, and significant scale effects are expected to repair profit margin levels.
Channel optimization and pricing are clear, and sales have returned to the upward channel
In terms of channels, Xiaopeng introduced a high-quality dealer system. In terms of pricing strategy, a passive price reduction strategy is changed to an active pricing strategy, emphasizing the cost performance ratio of models and the fault advantages of models. In terms of models, sales volume rebounded rapidly due to the launch of the G6 and the P7i facelift. The sales volume of the 2023Q3 was 39,000 units, up 30.8% year on year and 53.2% month on month. The G9 and P5 facelift, and the launch of the X9 are expected to expand the sales range. At the same time, the company's ability to cooperate with Didi and Dazhong has been fully recognized, which will also help the company's sales to return to an upward channel.
Profit Forecasts, Valuations, and Ratings
We expect the company's sales volume for 2023-2025 (excluding the MONA brand) to be 142/32.8/522,000 units, corresponding revenue of 364.1/883.7/142.94 billion yuan, respectively, with a year-on-year growth rate of 35.6%/142.7%/61.8%, respectively, and a 3-year CAGR of 77.42%. Net profit was -99.30/- 47.37/859 million yuan, respectively. We gave the company 2.0 times PS in 2024. The HKD/RMB exchange rate remained 0.90, and the target price was HK$113.30. First coverage, giving it a “buy” rating.
Risk warning: the progress of intelligent functions has fallen short of expectations; the impact of intelligence on vehicle sales is less than expected; and the price war has intensified or affected model competition.