On August 20, the company disclosed its 2024 semi-annual report. 24H1 achieved total revenue of 14.66 billion yuan, +61.2/ -32.1% month-on-month; gross profit margin of 13.5%, +14.9/10.8pct; net profit to mother -2.65 billion yuan, and a year-on-month loss of 2.49/2.58 billion yuan. Xiaopeng Motor's semi-annual report results were in line with expectations, and profitability increased significantly in the single quarter. The increase in gross margin was due to technical cooperation with Volkswagen, improved sales structure, and cost reduction.
Profitability improved steadily in the first half of the year, focusing on the increase in technical service fees from the public in Q3. On February 29, 2024, Xiaopeng Motor and Volkswagen Group announced that they have signed a joint platform and software development agreement, and Volkswagen technical service fees will contribute a considerable amount of technical service revenue in the first half of the year. On July 22, Xiaopeng Motor and Volkswagen Group signed a joint development agreement for strategic cooperation and development of electronic and electrical architecture technology. With this cooperation, technical licensing fees will begin to be collected in the third quarter. The volume of technical service revenue is expected to rise further, and gross margin is expected to target mature overseas SaaS companies, bringing significant improvements to Xiaopeng Q3's profitability.
Sales structure has been optimized, and quarterly delivery volumes have reached the next level. The total delivery volume of the 2024H1 was 0.052 million vehicles, +25.6/ -47.7% month-on-month; ASP 0.2376 million yuan, or +24.0/ 17.8% month-on-month; of these, the X9 delivered 13,143 units in the first half of the year, accounting for 25%. The X9 was the most expensive model in Xiaopeng's product matrix. The increase in sales share in the first half of '24 led to a rapid rise in sales share in the first half of '24. The company expects a total delivery volume of 0.041-0.045 million vehicles in Q3, +36-49% compared to Q2. Further growth in Q3 sales will drive a further increase in profitability.
The new model cycle is about to begin, and an upward inflection point is about to arrive. The Xiaopeng MONA M03 will be released and delivered on August 27. The new car has already started pre-orders and announced the reservation policy. The 99 yuan intention fund can be deducted from the 3,000 yuan purchase fee, and the model is positioned at the 0.15 million yuan level, which will take the lead in starting a strong product cycle lasting three years, which is expected to contribute considerable revenue, and the increase in sales will also quickly dilute Xiaopeng's expenses; Xiaopeng Motor will launch a pure electric sedan model P7+ in Q4. It is the first model after the cost reduction. The model's sales volume and profitability are expected to be migrated to the existing model. With 25 facelift models, the migration of technical solutions is expected to drive a sharp increase in overall model profitability.
Going overseas is accelerating, and it is expected to become the second growth curve. Xiaopeng Motor has significantly accelerated the pace of going overseas since this year. Not only has it achieved remarkable results in many European markets, but it has also accelerated its deployment in Southeast Asia. On August 21, Xiaopeng Motors held a press conference in Bangkok, Thailand. The right-hand drive version of the Xiaopeng G6, which was launched this time, is also the first model launched by Xiaopeng Motor in the Thai market. Following the launch in Thailand, Xiaopeng Motor will also launch the Xiaopeng G6 in Malaysia, and will successively enter markets such as Singapore and Australia. The rapid entry into overseas markets is expected to contribute to considerable profitability in the future.
Profit forecasting and valuation. The company's sales volume was slightly under pressure, but the progress of external cooperation and internal reforms exceeded expectations, and profitability was greatly increased. We lowered 24-26 operating income from 48/81.8/100.7 billion yuan to 38.2/62.7/81.2 billion yuan; net profit to mother for 24-26 was reduced from -51/-12/+1.4 billion yuan to -62/-12/+0.4 billion yuan. The closing price on August 26 corresponds to 0.8 times the 2025 PS. Ideal Auto, NIO, and BYD, a key Hong Kong stock automobile company, were selected as comparable companies. Due to Xiaopeng's perfect product model matrix in '25, to give a certain intelligent premium in order to grow and lead smart driving, the 2025 target is 1 times PS. There is still room for 25% growth compared to now, maintaining a “buy” rating.
Risk warning: Competition for new energy vehicles has intensified, raw material prices have fluctuated, and the company's net profit has not been corrected.