Incident: On August 20, Beijing time, Xiaopeng released the 24Q2 financial report: 24Q2 achieved revenue of 8.11 billion yuan in a single quarter, +60.2%/+23.9% year-on-year, respectively. 24Q2 sales were around 0.03 million vehicles, +30.2%/+38.4% YoY/+38.4%, respectively. The gross margin of the 24Q2 automobile business was +6.4%, and +15.0 pts/+0.9 pts year-over-year, respectively. The net loss due to mother for the 24Q2 quarter was 1.28 billion yuan, a year-on-year decrease, and was basically the same from month to month.
The gross margin exceeded expectations and the quality of operations continued to be optimized
Revenue side: 24Q2 achieved quarterly revenue of 8.11 billion yuan, +60.2%/+23.9% year-over-year, respectively.
Among them, the automobile business revenue for the 24Q2 quarter was 6.82 billion yuan, +54.1%/+23.0% year-on-year, respectively.
The year-on-month increase was mainly due to an increase in delivery volume. The 24Q2 bicycle ASP dropped from 0.254 million yuan in 24Q1 to 0.226 million yuan. In terms of other business, 24Q2 revenue reached 1.29 billion yuan, +102.5%/+28.8% year over month, respectively; the month-on-month increase was mainly due to the increase in sales of maintenance services in line with the cumulative increase in automobile sales, as well as the increase in sales of technology R&D services related to the Volkswagen Group's platform and software strategy technology cooperation.
Profit side: In terms of gross profit, the gross profit of the 24Q2 automobile business was 0.43 billion yuan; the gross margin of the automobile business was +6.4%, +15.0 pts/+0.9 pts year-over-year, respectively. Total gross profit for 24Q2 was 1.14 billion yuan, 24Q2 gross margin was +14.0%, and +17.9 pts/+1.1 pts year-over-year, respectively. The main reason for the change in overall gross margin in 24Q2 is 1) the high gross profit from revenue related to Volkswagen cooperation due to reduced costs and improved model product portfolios.
Expenses remain steady, and the outlook for performance is positive
Cost side: 24Q2 Xiaopeng's R&D expenses were 1.47 billion yuan, or +7.3%/+8.6% YoY. The 24Q2 R&D cost rate was 18.1%, and the year-over-year/month-on-month ratio was -8.9pts/-2.5pts. 24Q2 sales and management costs were 1.57 billion yuan, or +1.9%/+13.3% year-over-year, respectively. The 24Q2 sales management rate was 19.4%, and year-over-year/month-on-month was -11.1pts/-1.8pts.
Channel side: As of 24Q2, Xiaopeng had 611 sales centers, covering 185 cities. The number of sales centers increased by 37 compared to 23Q4.
Cash: As of 24Q2, Xiaopeng's cash and cash equivalents, restricted cash, short-term investments and cash deposits totaled $37.33 billion, a decrease of $4.07 billion compared to 24Q1. Short-term liquidity risk was weak.
Future outlook: The company expects 24Q3 car sales to be between 0.041 million and 0.045 million vehicles; the year-on-year range is +2.5% to +12.5%; the corresponding revenue is about 9.1 billion yuan to 9.8 billion yuan, and the year-on-year range is +6.7% to +14.9%.
End-to-end smart driving accelerates the launch of a strong product cycle
The end-to-end big model was first implemented, and strategic cooperation with Volkswagen was further deepened. In July '24, Xiaopeng pioneered the application and implementation of an end-to-end model on roads across the country. In the same month, Xiaopeng and Volkswagen Group signed a joint development agreement for technical cooperation on electronic and electrical architectures. It is expected that the first on-board model will be mass-produced within two years, and long-term strategic cooperation will continue to deepen. We believe that the development of AI technology will accelerate the arrival of an intelligent inflection point for users; Xiaopeng is expected to accelerate the smart driving penetration rate of 0.1-0.2 million in the mainstream car market through low-cost smart driving solutions, and lead to an increase in sales.
Mona M03 pre-sale has started, and a strong product cycle has started. The first M03 model in the Xiaopeng Mona series began pre-sale in August, and the next-generation sedan platform product P7+ will be officially launched in 24Q4. Furthermore, Xiaopeng is expected to launch a number of new, competitive products and facelifted models by the end of '26. The products will reflect the results of integrated AI technology, brand innovation plans, and technological cost reduction. We believe that Xiaopeng is starting a strong product cycle and entering a smooth phase of rapid development, which is expected to lead to further growth in sales and performance.
Investment advice: We are optimistic that Xiaopeng Motor will experience a double increase in performance and valuation driven by the model cycle, organizational innovation, and intelligent beta. We expect the company's revenue for 2024-2026 to be $40.25/65.79/93.26 billion, respectively, and net profit to mother of -6.91/-3.62/1.58 billion, corresponding to the closing price of Hong Kong stocks at HK$26.95 per share on August 21, 2024 (HKD/RMB exchange rate 1:0.92), PB 1.6/1.8/1.7 times, respectively, maintaining the “recommended” rating.
Risk warning: The boom in the automotive industry falls short of expectations; the penetration of electric vehicles falls short of expectations; market and channel expansion falls short of expectations; market competition intensifies, etc.