On the first AI Technology Day, the company unveiled internal range extension technology and revealed the latest developments in flying cars and Xiaopeng robots. The starting price of P7+ is 0.1868 million yuan, which is lower than market expectations of 0.19-0.2 million yuan. The P7+ has a high appearance, large space, high configuration, and is equipped with a high-end smart car as standard. We expect monthly sales of 1.2 to 0.015 million vehicles. The company fully embraces intelligent technology and maintains a “buy” rating.

The P7+ debuted nationwide with pure vision end-to-end. After 4 hours of launch, 31,528 cars broke the company's record for the P7+ positioning household C-class coupe. Large space, comfortable cockpit configuration, and advanced smart driving are all standard. The price of long battery life/ultra-long battery life is 0.1868/0.1988 million yuan, respectively. The pre-sale of the new car began in 12 minutes, breaking the company record for Dading Super 1w, 4h Dading Super 3w. The P7+ has a smooth body and high appearance. The car is over 5 meters long, comparable to the A6L. The internal room rate is 88%, the highest in its class, and the rear legroom is larger than that of a fuel-fueled executive class sedan. The trunk space is 725L, which can hold 33 20-inch suitcases. Ventilated heated massages are standard on the front and back of the interior seats.

All models are equipped with end-to-end advanced smart driving as standard. The 5.4.0 Tianji system was launched, and the personification of smart driving was increased by 4 times.

Both M03 and P7+ are expected to sell more than 10,000 per month. Focusing on the increase in production capacity and the 25-year facelift of old products, the M03 was delivered over 10,000 for two consecutive months in September-October, which greatly boosted the company's sales volume. After P7+ went on sale, it once again set a new order record. The official website was shut down for a while, and popularity continued to rise. After M03 monthly sales continued to break 10,000 and P7+ listing orders were hot, it is expected that the company will adhere to strategies such as large space, smart driving, and comfortable riding, and actively embrace the young, technology-friendly customer base market. Looking ahead to 25 years, models such as the Xiaopeng G6 are expected to continue to increase the company's sales limit, empowered by technologies such as AI Hawkeye Smart Driving.

Range extension technology broadens growth potential, and the growth curve of flying cars and robots is being realized at an accelerated pace. The company officially announced the “Kunpeng Superelectric” range extender system, which is based on a global 800V high-voltage SiC platform, equipped with a 5C ultra-rechargeable battery, a pure electric battery life of 430 km, and a comprehensive battery life of 1,400 km. The hybrid SiC coaxial electric drive has high energy efficiency, and the CLTC efficiency is the highest in the industry at 93.5%. The company's flying cars have completed the acceptance of airworthiness certification applications, supporting one-click takeoff, intelligent aerial driving, etc. It will launch its first public flight in November and pre-sale will begin in December. The AI robot “Iron” uses a human-like structure design and has flexible hands with 15 degrees of freedom.

Profit forecasting and valuation

Taking into account the popularity of the P7+, MONA M03 and the fierce competition of pure electric vehicles, the company is expected to sell 0.2/0.43/0.49 million vehicles in 24-26 years (previous value 0.24/0.36/0.46 million units), and the estimated revenue for 24-26 is 45.3/85.6/97.7 billion yuan (previous value: 60.3/85.2/103.3 billion yuan). Using segmented valuation, 1) Xiaopeng Motor's sales business was valued at HK$111.8 billion (the previous value of 1x 2024E PS was equivalent to HK$66.1 billion). The increase in valuation was mainly due to the increased probability that the MONA M03 and P7+ would explode under proven cost-effective and technology-equal product ideas; 2) the technical service business was valued at HK$40 billion (previous value HK$35 billion). Strong implementation and full-stack integration capabilities raised the company's target price to HK$80.32 (previous value: HK$53.48), maintaining a “buy” rating.

Risk warning: Consumer demand falls short of expectations, supply chain shortages, company product releases and orders fall short of expectations.