Revenue for the fourth quarter was slightly lower than expected, but the net loss was better than expected. Xiaopeng Motor's revenue for the fourth quarter was 13.05 billion yuan (RMB, same below), up 53.0% month-on-month, slightly lower than the market and our expectations of 5%. The number of deliveries in the fourth quarter was 60,000 vehicles, up 50.4% from the previous quarter. The gross profit margin for the fourth quarter was 6.2%, up 8.9 percentage points from month to month, better than the market and our expectations of 4.5-5%. Among them, the gross profit margin for cars in the fourth quarter was 4.1%, up 10 percentage points from month to month, mainly due to increased sales of models such as the G6 and G9. Xiaopeng maintained efficient cost control in the fourth quarter, which was better than our expectations. R&D/sales expenses increased slightly by 0.1% /14.4% month-on-month, accounting for a further decline in revenue. The company's net loss for the fourth quarter was $1.35 billion and non-GAAP net loss of 1.77 billion yuan. It was better than the market and our expectations. The main benefit was that gross margin and expenses were better than expected.

Xiaopeng Motor's revenue for the first quarter of 2024 was 5.8 billion yuan to 6.2 billion yuan, up about 43.8-53.7% year on year/down 52.5-55.6% month on month; vehicle delivery volume was 21,000 to 22,500 vehicles, up 15.2-23.4% year on year/down 62.6-65.1% month on month, which means that the March delivery volume was only 8,000-9,000 vehicles, which is about the same level as January this year, which is lower than our expectations.

Sales growth is under pressure, and the Mona brand will be released next month to enter BYD's main model market. Xiaopeng sold 2,183 vehicles last week. There was a slight improvement after the Spring Festival, but sales growth is under pressure. Among them, the MPV X9 is delivering early orders, and weekly deliveries can reach the level of ~1,000 vehicles, but the G6 only maintains the level of ~500 units (weekly sales volume of 2,000-3,000 units in the fourth quarter of last year). Xiaopeng increased discounts on various models in the first quarter, but the results were not obvious. At next month's auto show, Xiaopeng will launch its sub-brand Mona, which will first be delivered to To C in the 3rd quarter, and to To B in a few months. We repeat our view: in the price range of 100,000 to 200,000, car companies compete most fiercely. In terms of 150,000 scale and ability to control costs, the new forces are not as good as traditional car companies such as BYD. The main source of Mona's sales growth is probably more orders from DiDi.

Maintain sales. We slightly raised our 2024 sales/revenue forecast by 14.1%/10.1% to reflect X9 and Mona's sales contributions in the second half of the year. We forecast sales of 172,000 vehicles in 2024, and gross margin is expected to remain low in single digits in 2024, mainly due to a more intense price war. Based on our revenue forecast adjustments, the target price was raised to HK$29.96/$7.66 (XPENG US), corresponding 1.2 times the 2024 forward market sales ratio (unchanged). Maintain sales.