Q4 Excellent performance, record high revenue, maintaining H share “buy” rating
23Q4 revenue was $13.1 billion, +154% year over year, and annual revenue of 30.7 billion yuan, +14% year over year. 23Q4 net loss of 1.4 billion yuan. Xiaopeng's product matrix is gradually being improved, and in-depth cooperation with Didi and Volkswagen continues to deepen. Wutu XNGP is progressing smoothly, marketing and management efficiency are being improved at an accelerated pace, and sales and profit are expected to double increase.
We estimate that the company will sell 24/36/460,000 vehicles in 24-26, with an estimated revenue of 603/852/103.3 billion yuan in 24-26. We used segmented valuation to give Xiaopeng Motor's sales business 1.3 x 2024EPS, and give a technical service-related business a valuation of HK$35 billion. We adjusted the company's target price of HK$64.38 (previous value: HK$97.78) to maintain a “buy” rating.
The scale effect increased the gross profit in 23Q4, and the cost side improved significantly. Xiaopeng achieved a total of 60,158 units delivered in 23Q4, +171% year over year, +50% month over month; a total of 141,601 units were delivered throughout the year, +17% year over year. The gross margin for 23Q4 was 6%, and the gross profit margin for automobiles was 4%, turning a month-on-month loss into a profit. The month-on-month reversal of gross margin was mainly due to technology and engineering cost reductions and product portfolio improvements. The 23Q4 Xiaopeng G6 and facelift G9 were rapidly upgraded, the scale effect was enhanced, and the cost side was greatly improved. 23Q4 operating expenses rate 25%, year-on-year -33pct, month-on-month -10pct. 23 The annual cost rate was 39%, -6pct year over year. In terms of R&D, the company continued to invest in fields such as intelligent driving, three-electric technology, smart cockpit, and integrated die-casting. 23Q4 R&D expenses were 1.3 billion yuan, +6% over the same period last year. At the end of 23, the company's cash reserves reached 45.7 billion yuan, a net increase of 74/92 billion yuan month-on-month, once again returning to an all-time high.
XNGP is progressing smoothly, and unlimited XNGP pilots are open
The company's software algorithm side is leading, and the efficiency is improving rapidly. In December '23, XNGP cities welcomed full promotion in 27 cities; in January '24, the coverage was further expanded to 243 cities; in February '24, the unlimited XNGP “can be driven all over the country, can be driven” was launched to some users, and the scale of promotion will continue to expand in the future. In terms of smart driving costs, with the support of the X-NET 2.0 sensing architecture, Xiaopeng is expected to reduce radar dependency and halve overall costs. We believe that Xiaopeng has leading capabilities on the algorithm side and has strong technology accumulation, which can balance the speed of opening up the city and the degree of cost reduction; the gradual increase in consumer perception is expected to lead to a continuous increase in sales.
New brands enter the A-class car market, reduce costs of cooperation and highlight hard power
On March 16, Xiaopeng announced that it will launch a new brand in the next month and officially enter the 10-10,000 yuan A-Class global market. We expect Xiaopeng's smart driving capabilities to be devolved to new brands, and XNGP is expected to accelerate iteration.
In February, Xiaopeng Motor and Volkswagen signed a technical cooperation agreement for joint platform and software development, and also signed a joint procurement plan to jointly reduce platform costs. Xiaopeng will further optimize the cost structure. We believe that the deep cooperation between Xiaopeng and Volkswagen is a reflection of Xiaopeng's technical strength, and the company is expected to benefit from cooperation cost reduction in 24 years.
Risk warning: Consumer demand falls short of expectations, supply chain shortages, company product releases and orders fall short of expectations.