Key points of investment
Summary of the paragraph: The company disclosed the 2024 mid-year report. Q2 achieved operating income of 8.11 billion yuan, +60.2%/+23.9%; of these, automobile business revenue was 6.82 billion yuan, +54.1%/+23.0% year over month; net loss to mother was 1.28 billion yuan, a year-on-month decrease of 1.52/0.09 billion yuan, respectively; net loss to mother was 1.22 billion yuan, with a year-on-month decrease of 1.45 billion yuan, respectively. 0.19 billion yuan. The 24Q2 performance exceeded our expectations.
The revenue structure is improving, and the automobile business and overall gross margin have performed well. 24Q2's overall delivery achieved 0.03 million units, +30.2% year over year; the average bicycle price was 0.2257 million yuan, +18.4%/-11.2% year over month, mainly due to changes in the share of X9/G9 and other products delivered. The proportion of X9 delivered in Q2 decreased, and the average price declined. The company's Q2 service and other revenue reached 1.29 billion yuan, +102.5%/+28.8% year-on-month, which greatly improved mainly the growth of after-sales maintenance services. At the same time, the company's platform/software cooperation with the public contributed to technical licensing costs, and the revenue structure improved year-on-year. The 24Q2 company achieved an overall gross margin of 14.0%, +17.9/+1.1 pct, respectively; of these, the gross profit margin of the automobile sales business was 6.4%, and the year-on-month increase was +15/+0.9 pct, respectively. The significant increase over the previous year was mainly due to lower upstream costs and product structure optimization. Q2 achieved export sales of 4,430 units, +174% month-on-month, and the good profit performance of export models also contributed to positive gross margin growth. The gross profit margin for Q2 services and other businesses was 54.3%, 25.7/+0.4pct, respectively. In terms of expenses, the company achieved R&D/SG&A expenses of 1.47/1.57 billion yuan in Q2, corresponding expenses of 18.1%/19.4%, which declined further from month to month, and the amortization effect was obvious. In addition, the company achieved net other revenue of 0.28 billion yuan in Q2. The year-on-month increase was mainly due to increased government subsidies. By the end of 24Q2, the company had assets such as cash and equivalents of 37.33 billion yuan, and its cash flow was still relatively abundant.
A new strong cycle is expected to begin, and the large sales-profit-AI model capabilities will enter a positive cycle: Looking ahead to 24Q3, the company expects to deliver 0.041-0.045 million units, corresponding to total revenue of 9.1-9.8 billion yuan. Mona is expected to go public on August 27 and begin batch delivery soon, driving a continuous increase in quarterly delivery.
24Q4 will also launch a new P7+ medium and large sedan, launch the first L3 advanced intelligent driving solution without lidar, and implement Xiaopeng's own technology to reduce costs and achieve significant optimization of gross margin. From 2025 to 2026, the company expects to intensively launch a variety of new models and gradually switch existing models to a new platform to reduce costs, continue to optimize volume and profit, and is expected to enter a new round of upward growth cycle.
Profit forecast and investment rating: Considering the company's strong Q2 gross margin performance, which continues to rise, exceeding our expectations. Looking forward to the implementation of new model technology to hedge the negative impact of the launch of low-cost, low-margin models on the product structure, we raised Xiaopeng Motor's net profit forecast for 2024-2026, from -5.7/-2.5/2.2 billion yuan to -5.69/ -2.42/2.72 billion yuan, corresponding EPS of -0.03/-0.01/0.01 yuan, respectively. The inflection point of the new model cycle has been reached, maintaining Xiaopeng Motor's “buy” rating.
Risk warning: The price war in the passenger car industry exceeded expectations; the recovery in terminal demand fell short of expectations; the pace of introduction of L3 autonomous driving policies fell short of expectations.