Home » Guosheng Securities: Initial assessment of XPeng as Buy rating, target price of HK$259

Guosheng Securities: Initial assessment of XPeng as Buy rating, target price of HK$259

by SEP Editor
(Photo credit: Private banker international)

China, Jan.24 – Guosheng Securities, a Chinese full-service brokerage firm, issued a research report, giving XPeng Inc. (“XPeng” or the “Company”, NYSE: XPEV, HKEX: 9868. HK) -W (09868) a “buy” rating and a target price of HK$259. 

The current valuation does not yet include potential monetization such as smart cockpit, Robotaxi, robotics, and flying machines. Furthermore, XPeng’s intelligent exploration is expected to bring more technological and commercial value to the company. Guosheng Securities expects 2022-2025 sales of about 190,000/290,000/390,000/550,000 units and total revenue of CNY 21.1/39.9/64.1/93.5/121.8 billion in 2021-2025.

Factors of Guosheng Securities Valuation

(Photo credit: XPeng)

Positioning of XPeng

XPeng’s self-positioning is a “technology company focused on the future of mobility”. “Intelligent” is the company’s differentiating label from other electric vehicles. The company’s management team is mainly from Alibaba Group (a Chinese multinational technology company specialising in e-commerce, retail, Internet, and technology)  and GAC Motor, with the double gene of technology Internet and automobile manufacturing. XPeng has established the vision of technology to change mobility since its inception, and firmly in the direction of autonomous driving, intelligent cabin and other continuous investment.

The company’s product matrix of “G3+P7+P5+G9” has been formed, and the brand image of “intelligent driving” will be continuously strengthened through new products. In 2021, XPeng ranked first in the list of new forces with 98,155 units delivered.

The soft and hard strength of XPeng

2022 is the year when the new forces will meet in the price  and smart driving system, taking XPeng and NIO as examples: 

1) Price: XPeng price is slightly higher than NIO, both of them are in the 300,000-400,000 price level on average; 

2) Smart Driving: XPeng XPILOT4.0 and NIO NAD head-to-head.

Guosheng Securities expects that the national EV penetration rate is expected to reach 40% in 2025, and EV deliveries are expected to reach 7.9 million units. 

In this EV track, XPeng is equipped with both hard and soft strength.

The hardware side, XPeng conducts self-research on three electric core components.

The software side, XPeng has intelligent driving XPILOT and intelligent cabin XmartOS, its strength is firmly in the first echelon of the new forces of car manufacturing.

Guosheng Securities expects that in 2025, XPeng’s car sales are expected to grow to 550,000 units, with a 7% market share of electric vehicles.

XPeng’s smart driving technology

XPeng is the first Chinese car company to conduct full-stack self-research on autonomous driving. In detail, the two main applications are the XPILOT3.0/3.5 generation system and the two main functions of VPA intelligent parking and NGP automatic navigation assistance.

XPILOT3.5: 

1) Hardware side: XPILOT 3.5 comes with two LIDAR, more hardware redundancy than Tesla FSD, increasing reliability.

2) Algorithm side: XPILOT 3.5 relies more on visual perception; 

3) Scene side: XPeng is expected in 2022H1 for the first time OTA upgrade to urban NGP. with the XPeng car’s mass production acceleration and into robotaxi, its intelligent driving technology iteration will also speed up.

Guosheng Securities believes that smart driving is not only a technological advantage for XPeng, but will also be an important revenue and profit improvement engine, with growth driven by two main sources:

1) increased software payment penetration; 

2) increased software fees.

Guosheng Securities estimates that XPeng’s software services are expected to bring $6.6 billion in revenue in 2025. And due to the high software gross margin, the software contribution to gross profit in 2025 is expected to increase from about 5% in 2021 to about 23% in 2025. At that time, XPeng will be in the business model and traditional car manufacturers to pull the difference.

You may also like

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More