Xpeng Inc. (XPEV US) Company Update Summary
Core Content Overview
This report provides an analysis of Xpeng Inc.'s financial performance and outlook for the fourth quarter of 2022 (4Q22) and the fiscal year 2023 (FY23E). The report highlights the company's earnings miss, the impact of intensified competition, and its strategic shift toward cost optimization and customer focus. It also includes financial data, key ratios, and valuation insights for investors.
Main Points
4Q22 Earnings Performance
- Revenue: Missed expectations by 4%, primarily due to higher sales promotions.
- Gross Margin: Narrowed by 2.5 percentage points, reaching 5.7%, the lowest since 4Q20.
- SG&A Expenses: Increased by approximately RMB 270 million compared to prior estimates.
- Net Loss: Approximately RMB 2.4 billion, which is RMB 400 million wider than expected.
- Net Cash: Reduced by RMB 4.5 billion, more than projected.
FY23E Sales Forecast
- Sales Volume: Expected to rise sequentially, with the new G6 model launching in 2Q23.
- Sales Forecast Adjustment: Revised downward by 20,000 units to 135,000 units.
- Average Selling Price (ASP): Revised downward by 10% due to ongoing price competition.
Strategic Shifts
- Cost Optimization: Management now prioritizes cost-cutting, particularly in autonomous driving (AD) and powertrain.
- AD Cost Reduction: Projected to be reduced by 50% within two years.
- Powertrain Cost Reduction: Projected to be reduced by 25% within two years.
- Gross Margin Outlook: If cost reductions are realized, gross margin could exceed 20%.
- SG&A Forecast: Reduced due to new management and operational changes.
Key Financial Data
Revenue (RMB mn)
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| Revenue |
5,844 |
20,988 |
26,855 |
31,995 |
47,210 |
YoY Growth (%)
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| YoY Growth |
151.8 |
259.1 |
28.0 |
19.1 |
47.6 |
Net Profit (RMB mn)
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| Net Profit |
(4,890) |
(4,863) |
(9,139) |
(8,066) |
(6,472) |
EPS (RMB)
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| EPS |
(6.48) |
(2.96) |
(5.34) |
(4.70) |
(3.75) |
P/S Ratio
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| P/S |
3.7 |
2.2 |
1.9 |
1.6 |
1.1 |
P/B Ratio
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| P/B |
0.6 |
1.1 |
1.6 |
2.1 |
2.8 |
Net Profit Margin
| FY |
2020A |
2021A |
2022E |
2023E |
2024E |
| Net Profit Margin |
-83.7 |
-23.2 |
-34.0 |
-25.2 |
-13.7 |
Key Ratios
| Ratio |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Gross Margin |
4.6% |
12.5% |
11.5% |
12.5% |
15.1% |
| Operating Margin |
-73.5% |
-31.3% |
-32.4% |
-28.8% |
-15.7% |
| Net Profit Margin |
-83.7% |
-23.2% |
-34.0% |
-25.2% |
-13.7% |
| ROE (%) |
-35.4 |
-12.7 |
24.3 |
27.7 |
29.5 |
| Current Ratio (x) |
5.1 |
2.7 |
1.6 |
1.1 |
0.8 |
| Inventory Turnover Days |
88 |
53 |
50 |
45 |
40 |
| Payable Turnover Days |
334 |
246 |
200 |
180 |
180 |
Valuation and Investment Outlook
- Rating: BUY (Maintained)
- Target Price: US$14.00 (Previously US$18.00)
- Upside/Downside: +58.4%
- Current Price: US$8.84
- Valuation Basis: Based on 2.5x revised FY23E revenue estimates.
- Key Risks:
- Slower progress in autonomous driving (AD) technology.
- Faster catch-up from competitors.
- Lower-than-expected sales volume or gross margin.
- Sector de-rating.
Shareholding and Stock Data
| Metric |
Value (US$) |
| Market Cap |
7,627 million |
| Avg 3 mths t/o |
169 million |
| 52w High/Low |
35.35 / 6.18 |
| Total Issued Shares |
1,726 million |
Shareholding Structure
| Holder |
% Ownership |
| He Xiaopeng |
21.2% |
| Taobao China |
11.2% |
| Others |
67.6% |
Summary of Financial Highlights
- 4Q22 Earnings Miss: Revenue and net loss underperformed expectations due to increased competition and promotional activities.
- FY23E Outlook: Sequential sales growth is anticipated, with the G6 model as a key driver.
- Cost Optimization: Management is focusing on reducing costs in AD and powertrain.
- Valuation Adjustments: Target price reduced to US$14.00 due to lower sales growth expectations.
- Financial Health: Net cash decreased significantly, but the company remains in a position to support operations through financing and cost control.
Conclusion
Xpeng Inc. faced a significant earnings miss in 4Q22, attributed to fierce competition and increased promotional spending. However, the company is expected to see sequential sales growth in FY23E, driven by the new G6 model. Strategic changes in management have led to a focus on cost optimization, which could improve gross margins. Despite the challenges, the company maintains a BUY rating, though with a lower target price. Investors should remain cautious due to the risks associated with AD development, competitive pressures, and sector-wide valuation trends.
