A team at Hong Kong-based financial services firm CMB International initiated coverage of Xpeng Motors on Monday, giving its Hong Kong-listed stock a HK$196 ($25.2) price target and a buy rating.
Xpeng fell 3.24 percent to HK$149.2 in Hong Kong on Friday, and the target price implies a 31 percent upside. As of press time, Xpeng was up more than 10 percent to HK$165.6 in Hong Kong, reverting to its issue price of HK$165, after posting strong July deliveries of 8,040 units.
Xpeng sold 30,738 units in the first half of the year, up 459 percent year-over-year, and has surpassed last year's full-year delivery levels, CMB noted, adding that this was better than they had expected. The team's expectation for Xpeng deliveries this year is 58,900 units.
In the second half of the year, CMB expects Xpeng deliveries to outperform the first half of the year as deliveries of the mid-cycle facelift Xpeng G3i and the new model Xpeng P5 begin in September and October, respectively.
The team has raised Xpeng delivery forecasts for 2021-2023 by 38.8 percent, 37.6 percent and 31.5 percent to 82,000, 126,000 and 197,000 units respectively.
The G3i is priced at RMB 150,000 ($23,202) - RMB186,000, with a range of 460-520 km, and is produced at Xpeng's own Zhaoqing plant in Guangdong Province, with deliveries scheduled to begin in September.
The P5 sedan is based on the G3's platform and has a range of 460-600 km. Its top-of-the-line version is equipped with 2 LiDARs that enable automatic assisted driving on city roads. It is priced at RMB 160,000-230,000 and deliveries are scheduled to start at the end of October.
CMB believes that the Xpeng G3i and P5 are priced lower than the China-made Tesla Model 3 with the intention of capturing the mainstream market, and that the more aggressive pricing range will help stimulate sales performance in the second half of the year.
Xpeng went public in Hong Kong on July 7, raising more than HK$14 billion in capital and further solidifying its financial strength, the team said.
Xpeng is expected to use its abundant capital reserves to accelerate the research and development of autonomous driving and new models, and accelerate the layout of sales channels in order to capture new energy vehicle market space through its leading autonomous driving technology, the team said.
With the adjustment of sales volume expectations, CMB raised Xpeng's revenue forecast for 2021-2023 by 31.8 percent-38.2 percent, respectively.
"Based on our understanding of market valuation dynamics in the new energy vehicle industry, we believe vehicle delivery growth will be a key driver of the company's share price," the team said.
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