Top Chinese investment bank CICC initiated its coverage of Xpeng Motors in a research note on Wednesday, giving it an Outperform rating and a $46 price target for its US-listed ADRs and HK$180 price target for its Hong Kong-listed shares.
Xpeng fell 14.85 percent to $34.7 in the US on Tuesday and about 8 percent to HK$139.2 in Hong Kong on Wednesday. CICC said its target price implies 33 percent upside for Xpeng's US shares and 29 percent upside for its Hong Kong shares.
Xpeng rose 7.6 percent to $37.4 in the US on Wednesday. Its Hong Kong-traded shares were up 12 percent to HK$155.9 at press time.
CICC expects Xpeng to post EPS of -2.43 and -1.94 yuan in 2021-22, respectively. It has a target price on Xpeng corresponding to 7.5x EV/Revenue in 2022. Xpeng's current share price corresponds to 5.8x EV/Revenue in 2022.
CICC said it expects China's new energy vehicle penetration to be 25% by 2025, with sales reaching more than 7 million units, a 5x improvement from 2020.
Xpeng's vehicle sales are in the top 10 in the industry and will benefit from the current round of industry change, with broad growth potential, CICC said.
Xpeng is selling the P7 and G3, and plans to deliver new vehicles in the fourth quarter and launch new models next year to achieve a complete product layout from A-class to B-class and sedan to SUV, the team noted.
CICC believes that Xpeng will be able to widen the gap with traditional car companies by rapidly iterating with its full-stack self-research technology, which is rare in the industry, thus achieving upward branding and premium pricing, and continuing to increase sales and market share.
While the market generally believes that overseas car companies are ahead of Xpeng in terms of autonomous driving and branding, CICC says Xpeng has achieved better autonomous driving capabilities with a deeper understanding of the Chinese market.
"The company's in-house developed XPilot autonomous driving system is currently the first in China to achieve full-stack development by a local company. Based on the massive amount of local data, XPilot provides an intelligent driving experience more suitable for Chinese roads," CICC said.
In addition, CICC sees the launch of new models such as the P5 and the upgrades and new features of XPilot as potential catalysts.
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