Key investment points

Xiaopeng has completed management upgrades, and the competitiveness of model products has been steadily improving. In the “Xiaopeng Auto: Fully Upgraded Capabilities, Leading a New Era of Smart Driving” report, we proposed that the growth path of new car companies is essentially the wooden barrel effect. Behind the continuous iteration of products is the improvement of car companies' capabilities, and core department heads play a critical role. After Wang Fengying joined Xiaopeng Motors in 2023-2024, he made up for past weaknesses, completed adjustments by core department heads, and upgraded the entire model process from design to sales. As the two main models after Xiaopeng Motor's management adjustments, the Mona M03 and P7+ benefit from clear price advantages and clear product definitions, obvious order data advantages, and excellent model sales performance after the core management was replaced.

Existing models: Premium coups have become popular models, and facelift and exports are expected to accelerate M03:0.08-0.15 millionA class sales volume of 3.032 million units from January to October 2024, a year-on-year decrease of 18.7%. The A-class car market requires high-quality supply to drive sales. The Xiaopeng Mona M03 has a large, wide-body design and maintains a lead among models in the same class in terms of wheelbase, price, and pure electric smart driving. It is expected that monthly steady sales may exceed 0.01 million vehicles. P7+: C-Class sales from January to October 2024 were 0.938 million units, up 16.2% year on year, with sales of 0.51 million units under 0.4 million, up 55.6% year on year, accounting for 54.4%. Xiaopeng P7+'s advantages in terms of price, smart driving, space, and maneuverability have achieved sales. Steady monthly sales are expected to exceed 0.01 million vehicles. The facelift and exports of old models are expected to accelerate in 2025, and it is estimated that 0.19 million/0.35 million vehicles will be delivered in 2024/2025, respectively.

Potential growth: Looking at the existing product structure that lays out the SUV market, or becomes the key to subsequent sales growth, after G3i withdrew from the market, G6/G9 positioned B-class/C-class SUVs respectively. There was a gap between the A-class SUV market and the D-class SUV market, and there was a shortage of models with 6 seats or more. In terms of market space, among A/B/C+D class SUVs, models with product advantages can gain a large sales volume and share. Combined with Xiaopeng Motor's plan to launch 4 new cars in 2025, it is conservatively estimated that the 2025/2026 new models will achieve sales volume of 0.09/0.27 million vehicles.

Investment advice

Xiaopeng Motors is expected to achieve rapid sales growth in the future. We expect the company's sales volume in 2024/2025/2026 to be 0.191/0.442/0.652 million vehicles, respectively. Corresponding revenue of 43.54/94.75/136.41 billion yuan, a year-on-year increase of 41.9%/117.6%/44.0%. Net profit to mother was -6.2/-0.59/4.31 billion yuan, respectively. The launch of high-quality models is expected to usher in an inflection point in sales. Iteration of intelligent driving is expected to help the company reverse financial data, and Volkswagen cooperates to cash in on revenue through technological leadership. The pace of model launches affects revenue and ability to deliver results. Maintain a “buy” rating.

Risk warning: Advances in intelligent driving, overseas expansion falls short of expectations, competition increases risk, steady state model calculations affect accuracy, etc.