CICC: Maintains XPENG-W outperform rating with a target price of HKD 108

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that the current stock prices of XPeng Motors-W (09868) in Hong Kong and the US correspond to a 1.6x P/S for 2025. They maintain an outperform rating for the industry and keep their profit forecast unchanged. The target prices for Hong Kong and US stocks are set at HKD 108 and USD 28, respectively, indicating an upside potential of 40% and 35% from the current stock prices, both corresponding to a 2.2x P/S for 2025. The company announced its 2Q25 performance, with 2Q revenue of RMB 18.274 billion and a Non-GAAP loss of RMB 385 million. The scale effect has significantly improved the gross margin on a year-on-year and quarter-on-quarter basis, leading to performance exceeding market and CICC expectations.

CICC's main points are as follows:

2Q performance exceeded market expectations, gross margin continues to improve

In 2Q, the company delivered a total of 103,181 vehicles, continuing to set a quarterly sales record, which drove the company to achieve revenue of RMB 18.274 billion in 2Q. The comprehensive gross margin for 2Q was 17.3%, up 3.3 percentage points year-on-year and 1.8 percentage points quarter-on-quarter, with the gross margin for the automotive business at 14.3%. This improvement was mainly due to the increase in parts commonality, delivery volume, and the proportion of high-margin models. On the expense side, the company maintained good control in 2Q, with R&D expenses of RMB 2.21 billion and selling and administrative expenses of RMB 2.17 billion. Overall, the scale effect has driven continuous improvement in gross margin, and efficient cost control has led to performance exceeding market and CICC expectations. The company's Non-GAAP net loss for 2Q was RMB 385 million, compared to a net loss of RMB 1.22 billion in 2Q24, continuing to show a narrowing trend.

Guidance for September sales to exceed 40,000, entering a super electric cycle

Recently, the company’s new model P7 Next has started pre-sales. The new car is equipped with three self-developed Turing AI chips and features an 800V platform with 5C supercharging batteries, receiving positive market feedback. The company guided for 3Q deliveries of 113,000 to 118,000 vehicles, representing a year-on-year increase of 142.8% to 153.6%. During the earnings call, the company stated that it will achieve monthly sales of over 40,000 vehicles starting in September. CICC believes the company is entering a new super electric product cycle, with plans to officially start mass production of the Kunpeng super extended-range electric series' first model in 4Q, and gradually complete the dual-energy version switch for existing models. CICC believes that the pricing of models launched in the second half of the year, such as P7 Next, will be above RMB 200,000, which is expected to drive continuous quarter-on-quarter improvement in profitability, as the current market still has expectation gaps for the company.

Building a comprehensive AI ecosystem, focusing on overseas market progress

During the earnings call, the company stated that it plans to mass-produce L4-capable models by 2026 and intends to pilot Robotaxi operations and services in certain regions. The company is expected to become the first domestic automaker with L4 computing power, software, hardware, and cloud capabilities in pre-installed mass production. Additionally, the company has made breakthroughs with its next-generation humanoid robot, rapidly advancing towards a mass-producible version with initial L4 capabilities based on Turing chips, VLA, and VLM, with plans for mass production in the second half of 2026. In terms of overseas markets, the company delivered over 18,000 vehicles overseas in the first half of the year, a year-on-year increase of over 200%. Furthermore, in July, the first locally produced XPeng X9 model in Indonesia was officially delivered, marking the company's formal launch of a global localization production strategy. The company plans to fully complete the global launch of the Kunpeng super electric and European versions in overseas markets in the second half of 2026, significantly expanding the global reachable market size Risk Warning: Demand for new cars and autonomous driving is below expectations, and new car deliveries and cooperation with Volkswagen are also below expectations