[Key investment points]
Revenue continued to grow, and losses gradually narrowed. 24Q2 achieved revenue of 8.11 billion yuan, +60.2%/+23.9% YoY, of which automobile sales revenue was 6.82 billion yuan, +54.1%/+23.0% YoY. 2024Q2 had a net loss of 1.28 billion yuan, which was reduced compared to 2023Q2 (-2.8 billion yuan) and 2024Q1 (-1.37 billion yuan). 24Q2 delivered 0.0302 million new vehicles, +30.2%/+38.4% YoY. The company expects 24Q3 to deliver 0.041-0.045 million new vehicles, an annualized increase of 2.5%-12.5%; total revenue is approximately RMB 9.1-9.8 billion, an annualized increase of 6.7%-14.9%.
By deepening cooperation with Volkswagen, gross margin is expected to continue to improve. 2024Q2 gross margin was 14.0%, +17.9/+1.1 pct y/y. Among them, the gross margin of automobiles was 6.4%, +15/+0.9 pct year over month, mainly due to cost reduction and model product portfolio improvement; service and other gross margin was 54.3%, +25.7/+0.4 pct year over month. The main reason was the high gross margin of technical revenue from Volkswagen's strategic cooperation. In July 2024, the company and Volkswagen Group signed a strategic cooperation and joint development agreement for electronic and electrical architecture technology to develop electronic and electrical architectures for CMP and MEB platforms produced by Volkswagen in China. As cooperation between the two sides deepens, the company's gross margin is expected to continue to improve, driven by the growth of related revenue and the increase in sales volume and efficiency of the company's products.
Start a strong product cycle, and the overseas layout continues to gain strength. The MONA M03 was launched in August; Q4 will officially launch the P7+, and the P7+ will be the first model of Xiaopeng's next-generation autonomous driving hardware platform.
In the next three years, the company will enter a strong product cycle, with a large number of new models and modified models on the market. It is expected that Xiaopeng will expand its market share after the MONA M03 and P7+ delivery climbing are completed.
2024Q2 contributed more than 10% to the company's overseas sales volume for the first time. The company plans to expand its overseas sales network from the original Nordic countries to more than 20 countries. In the first half of the year, we have established cooperative relationships with a number of leading dealer groups in Western Europe, Southeast Asia, the Middle East, Australia, etc., and have opened new sales stores one after another. The company's long-term layout with international models and overseas markets has entered a period of rapid development, and is expected to become an important driving force for sales and profit growth in the future.
[Investment advice]
The company's profit forecast and investment rating: In the short term, the company's new car cycle begins, the product matrix continues to be enriched, and channel reforms are gradually being implemented, which is expected to usher in sales growth; in the medium to long term, the company insists on full-stack self-research, deep technology accumulation, and cooperation with the public continues to deepen. Technical service revenue is expected to continue to grow, while actively promoting the business layout of flying cars, humanoid robots, etc., to expand more room for growth. We maintain our estimated 2024-2026 revenue of 50.232, 73.701, and 99.429 billion yuan, respectively, and net profit to mother of -6.58, -3.069, and 1.188 billion yuan, respectively. The corresponding PS is 1.11, 0.75, and 0.56 times, respectively, maintaining the “gain” rating.
[Risk Reminder]
The implementation of intelligent technology and the opening of smart driving in the city fell short of expectations
Sales of the new model fell short of expectations
Competition in the industry has further intensified