20220329-招银国际-Mixed_4Q21_results__G9,_new_platforms_key_drivers_4页_970kb

Xpeng Inc. (XPEV US) Company Update Summary

Core Content

Xpeng Inc. (XPEV US) reported mixed results for the fourth quarter of 2021 (4Q21), with a gross margin of 10.9% despite a 63% quarter-over-quarter (QoQ) increase in sales volume. The net loss for 4Q21 was RMB 1.3bn, which was RMB 500mn better than expected, primarily due to a RMB 592mn fair value gain from investments in the flying car company Xpeng Huitian.

The report maintains a BUY rating but lowers the target price from US$80.00 to US$67.00, reflecting a potential upside of +147.0% from the current price of US$27.13. The analysts note that the short-term lack of catalysts is expected, but medium-term optimism remains due to the company's focus on autonomous driving (AD) and smart cockpit technologies.

Main Points

• Gross Margin Concerns: The gross margin miss in 4Q21 is attributed to production inefficiencies and the company's initial prioritization of AD and smart cockpit technologies over manufacturing optimization. This results in lower margins compared to competitors like NIO and Li Auto.
• New Platforms in FY23E: Xpeng plans to launch two new platforms in fiscal year 2023 (FY23E), which are expected to significantly improve gross margins starting from late FY23E or early FY24E.
• Key Products: The G9 and XPilot 4.0 are seen as key drivers for the company's valuation premium. XPilot 4.0 is expected to have a take rate higher than 50%, and the G9 is crucial for margin lift and upmarket capabilities.
• Sales Forecast Adjustments: The FY22E sales volume forecast was reduced by 10,000 units to 210,000 units due to supply chain constraints affecting the P5 model.
• Valuation: The company is valued at a premium compared to Li Auto and NIO, with a P/S ratio of 7.5x for FY22E, down from 9.0x previously. The analysts believe this valuation is justified by Xpeng's leading technologies and current R&D progress.

Financial Highlights

Revenue (RMB mn)

• FY19A: 2,321
• FY20A: 5,844
• FY21A: 20,988
• FY22E: 47,421
• FY23E: 75,529

YoY Growth (%)

• FY19A: 23,815.3
• FY20A: 151.8
• FY21A: 259.1
• FY22E: 125.9
• FY23E: 59.3

Net Profit (RMB mn)

• FY19A: (4,643)
• FY20A: (4,890)
• FY21A: (4,863)
• FY22E: (5,112)
• FY23E: (2,659)

EPS (RMB)

• FY19A: (13.29)
• FY20A: (6.48)
• FY21A: (2.96)
• FY22E: (3.06)
• FY23E: (1.58)

P/S Ratio

• FY19A: 14.2
• FY20A: 11.4
• FY21A: 6.7
• FY22E: 3.0
• FY23E: 1.9

P/B Ratio

• FY19A: (4.8)
• FY20A: 1.9
• FY21A: 3.4
• FY22E: 3.9
• FY23E: 4.2

ROE (%)

• FY19A: N/A
• FY20A: (35.4)
• FY21A: (12.7)
• FY22E: (12.9)
• FY23E: (7.4)

Key Risks

• Slower AD Technology Advancement: If Xpeng's AD development does not meet expectations, it could impact the valuation premium.
• Faster Catch-Up from Competitors: Other automakers may advance more quickly in AD and smart cockpit technologies, affecting Xpeng's competitive edge.
• Lower Sales or Gross Margin Than Expected: If the company fails to meet sales or margin targets, the valuation could be negatively impacted.
• Sector De-Rating: A broader de-rating in the China auto sector could affect Xpeng's stock price.

Stock Data

• Market Cap (US$ mn): 23,235
• Avg 3 mths t/o (US$ mn): 436
• 52w High/Low (US$): 56.45 / 18.01
• Total Issued Shares (mn): 1,713

Shareholding Structure

• He Xiaopeng: 21.2%
• Taobao China: 11.2%
• Others: 67.6%

Share Performance

• 1-mth: -22.6%
• 3-mth: -39.0%
• 6-mth: -23.7%

Analysts

• SHI Ji, CFA: (852) 3761 8728 | shiji@cmbi.com.hk
• DOU Wenjing, CFA: (852) 6939 4751 | douwenjing@cmbi.com.hk

CMBIGM Ratings

• BUY: Potential return of over 15% over next 12 months
• HOLD: Potential return of +15% to -10% over next 12 months
• SELL: Potential loss of over 10% over next 12 months

Summary of Key Financial Metrics

• Gross Margin: 16.0% (FY22E) vs. 17.6% (old estimate)
• Operating Margin: -12.3% (FY22E) vs. -7.6% (old estimate)
• Net Margin: -10.8% (FY22E) vs. -6.3% (old estimate)
• Current Ratio: 1.6 (FY22E) vs. 5.1 (FY20A)
• Inventory Turnover Days: 45 (FY22E) vs. 53 (FY21A)
• Payable Turnover Days: 200 (FY22E) vs. 246 (FY21A)

Additional Notes

• The report highlights the importance of the G9 and XPilot 4.0 in driving future performance and valuation.
• The company's focus on technology development may lead to a slower improvement in gross margins in the short term.
• The analysts have revised their estimates for FY22E and FY23E, leading to a lower target price but continued confidence in the company's long-term potential.