Zhongjin released a research report stating that it maintains a 'outperform' rating for Xpeng-W (09868) with a target price of HKD47. The company's automated driving research and production pace of functions has long been in the forefront of domestic car companies, and with excellent software research and development capabilities, the company has reached a strategic partnership with Volkswagen and outputted solutions for the EEA architecture and full set of intelligent solutions. The relevant income has already been reflected in the company's 1Q24 performance. In addition, the company officially launched the first model of the MONA series on July 3, so as to fill the product matrix in the Volkswagen market price range.
CICC's main points are as follows:
Continuously iterating to consolidate technical advantages and improve the intelligence driving experience and cost-effectiveness.
In terms of intelligent driving, the company has the production capacity of a graphic-free plan and first achieved the full push of city NOA, opened cities and mileage for rapid accumulation, and is in a leading position in the industry. In addition, the company plans to achieve multidimensional cost reduction in the hardware aspect and promote more economical high-level intelligent driving functions to be implemented in low-priced markets. In terms of underlying E/E architecture, the company has gone through three iterations and currently leads the industry in the production of central computing + domain centralized architecture. Overall, the bank believes that the company's automated driving research and production pace of functions have long been among the top domestic car companies.
Exploring more ways to monetize intelligent driving, and working closely with Volkswagen to open up software authorization.
The company's cooperation with Volkswagen has gone through three stages: technology cooperation based on the G9 platform, joint procurement, and EEA technology strategic cooperation. Starting from 1Q24, the software service revenue has been officially realized on the financial statements. The bank expects that it will be able to support the gross margin to maintain in the double digits during the company's product cycle transition period. After the cooperative models are officially put into production in 2026, the company is expected to charge software authorization fees per vehicle, and further stabilize software revenue and help reduce losses by linking software revenue with sales volume. The bank believes that: 1) under the premise of considerable revenue volume, the company is expected to establish cooperation relationships with more car companies, achieve diversified revenue structure, and advance the turning point for profit; 2) the platform software services are expected to be normalized, with a unique business model, a smooth and predictable amount, and a high profit margin, gradually forming an independent valuation and supporting the overall valuation increase.
The first model of the MONA series is planned to be launched in August, with sales volume and strategic significance for the To-C market.
The MONA's first model, M03, is aimed at young customers in the A-level car market, priced below RMB 200,000, and with good looks and interesting features as the main characteristics. It has better energy consumption performance, with about 15% reduction in energy consumption per 100 kilometers. At the same time, it achieves technological cost reduction and better endurance through a low wind resistance coefficient of 0.194Cd and an AGS active air intake grille. The company expects to launch it in August. On the To-C side, the bank estimates that the 100,000 to 200,000 yuan sedan and SUV market has a large space and a low penetration rate of pure electric vehicles. The bank believes that with reasonable pricing, autonomous driving is expected to achieve differentiation advantages in this price range. Therefore, the bank is bullish on the sales performance of the MONA series models.
Risk: new car and autonomous driving demand is lower than expected, and cooperation with Volkswagen is lower than expected.