Chinese stocks took a hard hit in 2021 as Beijing authorities tightened regulations and sent investors to the exit gates. Despite the general support from the government, due to the more difficult landscape that EVs had to face in 2021, China’s EV stocks have not been spared either. Shares of XPeng (XPEV), for example 5% in the red this year.
However, after the company’s Q2 results, which Deutsche Bank Edison Yue Calling “mostly solid,” the analyst sees enough to be heartened about XPeng’s prospects.
That’s despite what Yu calls a “conservative” 3Q21 advice. The company expects between 21,500 to 22,500 deliveries, below “investor expectations” in the range of 24,000-25,000.
Yu thinks the soft guidance is “almost entirely due to the timing of the G3i switchover”. The model is getting a mid-stage makeover in China, with deliveries starting in September, and the transition should result in “a few weeks of downtime.” Moving on, however, in the fourth quarter, given “product freshness and accelerating EV penetration,” the analyst expects all three XPeng vehicles to deliver strong sales, with management now looking to hit maximum monthly deliveries. of 15,000 in the quarter.
With this in mind, Yu raised its forecast for 2021 and now called for 88,000 deliveries (vs 74,988) and nearly 20 billion RMB in revenue compared to the previous estimate of 16.791 billion RMB.
Yu expects more growth in 2022, based on the full-year contribution of the P5 and the introduction of a large SUV (G7). However, it’s even further when it gets really interesting.
“We think 2023 will be the most strategic year as the company will launch its next-gen global vehicle platform, designed for RHD and LHD markets, and unveil 2-3 new models each year,” the analyst said. “These vehicles will support at least XPILOT 3.0 capabilities and we believe the offerings will eventually converge to XPILOT 4.0 over time to streamline the user experience.”
Overall, Yu rates XPEV stock as a buy, while the price target gets a nudge upward — from $50 to $51, suggesting stocks will gain 25% over the next year. (To view Yu’s track record, click here)
Then we now move to the rest of the street, where the overall target is a more optimistic $56, implying a ~37% share appreciation in the coming months. The optimism also extends to the ratings of the analysts – based on a unanimous 7 Buys, the stock qualifies with a Strong Buy consensus rating. (See XPeng stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.