US-listed Chinese EV makers - NIO, XPeng Motors, and Li Auto - will report their fourth-quarter earnings and provide 2021 guidance in the next two weeks.
Shares of the trio have retreated significantly, with all three plunging more than 20 percent since February 10.
At a time of fragile market sentiment, investors are anticipating good news from the fourth-quarter earnings report.
So, what should we look for in the upcoming earnings reports?
In a note to investors on February 23 before the bell, analysts led by Edison Yu at Deutsche Bank said they expect solid fourth-quarter results across all three names given volume upside.
NIO and XPeng will initiate stronger than expected outlooks driven by higher volumes while Li Auto could be more in line, the analysts said.
Li Auto: February 25
Li Auto will release its fourth quarter and full-year 2020 financial results on February 25, 2021, before the US stock market opens.
Following the earnings release, Li Auto's management team will host a conference call on February 25 at 7:30 a.m. ET (8:30 p.m. Beijing Time on February 25).
The company delivered 14,464 vehicles in the fourth quarter, above guidance of 11,000-12,000 units.
Here are Yu's team's expectations for the 2021 outlook:
Deliveries: we expect management to guide 60-70k (DB at 65k), about in- line with DB/consensus with 1Q volume around 12-13k
Sales (RMB): will likely not provide full-year revenue target (we are at 18.7bn vs. Street 19.0bn); we expect 1Q will be guided for 3.25-3.50bn
Gross margin: we expect management to aim for high teens (DB/Street both around 18%)
Opex: higher nominal R&D to boost spending on BEV and ADAS/AD (>2bn); SG&A should also increase meaningfully
Capex: higher YoY (>2.5bn)
With no new models slated to launch in 2021, Yu's team thinks the focus will be on-demand of the existing Li ONE SUV and its developmental efforts toward BEV especially in light of the Shanghai government deciding to phase out free license plates for plug-in hybrid electric vehicles (including EREV) in 2023.
Li Auto's next model will be launched in 2022 (large SUV) but an unveiling time frame has yet to be set.
Yu's team trims their price target by $1 to $34, based on slightly lower estimates, still using 6x 2022E EV/Sales.
NIO: March 1
NIO will report its fourth-quarter and full-year 2020 unaudited financial results on March 1, 2021, after the close of the US markets.
Its management will host an earnings conference call at 8:00 PM US Eastern Time on March 1, 2021 (9:00 AM Beijing/Hong Kong Time on March 2, 2021).
DB's 2021 outlook:
Deliveries: we expect management to guide 85-95k (DB at 90k), above consensus in the mid-80k range, with 1Q volume around 17.5-18.5k.
Sales (RMB): will likely not provide full-year revenue target (we are at 33.8bn vs. Street 31.4bn); we expect 1Q will be ~7bn
Gross margin: we expect management to guide mid-high teens (DB/Street at 17-18%)
Opex: higher nominal R&D for ADAS/AD and accelerated vehicle development (3.5bn); SG&A should also increase meaningfully as NIO ramps up suite of services and network
Capex: higher at least 3bn (500m-1bn for network expansion, another 500m-1bn for ET7 related tooling/mold fixture, remaining for new plant)
The team said with the NIO Day event now behind, investor focus will be on demand for NIO's existing vehicles in the face of aggressive competition from the China-made Tesla Model Y.
NIO will also need to provide its detailed plan for its next plant in Hefei including cost/funding, timeline, and production capacity, the team said.
Yu's team maintains their $70 price target, based on 10x 2023E EV/Sales.
XPeng: March 8
XPeng will report its fourth quarter and fiscal year 2020 unaudited financial results on March 8 before the open of the US stock markets.
XPeng's management will host an earnings conference call at 8:00 AM US Eastern Time on March 8, 2021 (9:00 PM Beijing/Hong Kong time on March 8, 2021).
DB's 2021 outlook:
Deliveries: we expect management to guide for 70-75k (DB at 70k), above consensus in the low-mid 60k range, with 1Q volume around 13-14k
Sales (RMB): will likely not provide full-year revenue outlook (we are at 15.2bn vs. Street 13.6bn); we expect 1Q will be around 3bn
Gross margin: we expect management to guide low-mid teens (DB/Street at 12-13%)
Opex: higher nominal R&D for ADAS/AD and accelerated vehicle development (>2bn); SG&A should also increase meaningfully as XPeng expands charging & service network
Capex: higher at least around 2bn
It's worth noting that the 180-day lock-up period on shares of XPeng expired February 22 EST, and they were free to float from February 23.
Just before the market open on February 23, a Bloomberg report said XPeng holder Shanghai Cheyou offers 10.5 million ADR via Goldman Sachs.
Shanghai Cheyou bought 15.8 million shares on April 24 pursuant to warrants issued in 2019, according to a filing in December.
The offering is priced between $35.25-$35.75, representing a 5.92% to a 7.24% discount to the last close.
XPeng shares went down by as much as 14 percent in early hours on Tuesday. As of press time, the decline narrowed to 5.6 percent.
Yu's team said in the report that their Catalyst Call on XPeng was clearly ill-timed "(perhaps underestimating the impact of the lock-up expiration), we like the set-up heading into the print and for the rest of the year. "
In addition to a strong 2021 outlook, the company will demo its new L3 parking feature and officially unveil its next model (smaller P5 sedan) in the second quarter which has a larger TAM than the existing flagship P7.
Moreover, this will be the first mass-produced vehicle to offer LiDAR as a feature and begin deliveries in 4Q.
Yu's team trims their price target by $3 to $55, reflecting a higher share count, still based on 9x 2022E EV/Sales.