XPeng delivered mixed fourth-quarter results along with guidance that appears somewhat conservative, according to Deutsche Bank analyst Edison Yu's team.
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XPeng Motors (NYSE: XPEV, HKG: 9868) reported fourth-quarter and full-year 2021 earnings on Monday, and Deutsche Bank analyst Edison Yu's team has provided their initial observations.
Here is the text of the research note the team sent to investors on Monday:
XPeng delivered mixed 4Q results along with guidance that appears somewhat conservative. Deliveries were already reported at 41,751 units (+222% YoY; +63% QoQ), leading to revenue of 8.56bn RMB, essentially in line with our 8.59bn RMB forecast.
Total gross margin declined 240bps QoQ to 12.0%, below our 13.4% estimate (consensus 12.7%), negatively impacted by lower P7 vehicle mix and "services & other" margin.
Opex of 3,467m RMB came in slightly higher than expected (DBe at 3,350m), driven by SG&A (expansion of sales network and higher sale commissions).
All together, EPS of (1.41) came in much better though than our (2.26) forecast, due to one-time investment and derivative gains below the operating line worth >900m.
Management provided what we view as conservative 1Q22 volume guidance, calling for 33,500-34,000 deliveries, vs. our 34,500 forecast. This implies March sales of about 14,600 units at the midpoint.
The company has a history of giving conservative guidance so we would expect March to be above the high end of the range and remain comfortable with our ingoing forecast, potentially seeing some upside >15,000. This is expected to translate into sales of 7.2-7.3bn RMB.
XPeng provided further color on broader 2022 dynamics:
P7 volume is expected to run ~10k/month or higher during some months
P5 deliveries will be constrained by supply chain until 2H where the target is to get to 10k/month
1H gross margin should be similar or better than 4Q's considering 1Q was not impacted by higher battery costs (used existing stock), higher P7 mix, and price hikes kicking in late May/June for deliveries (i.e., has to work through order backlog that led up to price increase)
2H gross margin should be higher than 1H given full benefit of price hikes (+10-20k) and G9 launch which is a higher-margin product
R&D is expected to be up materially YoY to 6-7bn RMB while SG&A should trend lower as % of sales to the high teens