HSBC initiates coverage on XPeng with a price target of $37 enhancing “rapid sales growth”

Written by Cláudio Afonso | info@claudio-afonso.com

HSBC analyst Yuqian Ding initiated on Friday coverage on XPeng shares with a Buy rating and a price target of $37.00. The analyst believes that XPeng’s technology leadership and solid product cycle will let the company to achieve “rapid sales growth” as he is also constructive about its “earnings profile in the medium term”.

The analyst comments “Initiate on US and H shares with Buys, DCF-based TPs of USD37 and HKD143. XPeng’s US share price has corrected by 46% from the beginning of the year (vs. S&P500 index’s -4%) due to a lower risk appetite, ADR delisting risks, and potential disruption to demand and overall profitability given higher commodity prices of lithium carbonate, nickel and so on. XPeng’s US/H shares are now both trading at a 12MF PS of 2.8x, historical troughs. We initiate on Xpeng’s US/H shares (XPEV US/9868 HK) at Buy/Buy as we are constructive about rapid sales growth and its earnings profile in the medium term on the back of its technology leadership and solid product cycle. Our target prices for Xpeng’s US and H shares imply 37% and 33% upside from current levels, respectively.”

XPeng announced on Friday that delivered a total of 15,414Smart EVs in March 2022, representing a 202% increase year-over-year and a 148% increase from the previous month. Monthly delivery of the P7 smart sports sedan exceeded 9,000 in March 2022 for the first time, reaching 9,183. March deliveries also consisted of 4,398 P5 smart family sedans and 1,833 G3 and G3i smart compact SUVs.

Total deliveries for the first quarter of 2022 reached 34,561 vehicles, a 159% increase year-over-year, consisting of 19,427 P7s, 10,486 P5s and 4,648 G3 and G3i SUVs. As of March 31, 2022, XPeng’s cumulative deliveries reached 172,514 vehicles.

Last month, the company announced that the technology upgrade at the Zhaoqing plant during the Chinese New Year holiday from late January to early February has been completed. Production at the Zhaoqing plant was resumed in mid-February as planned enabling XPeng to accelerate delivery of its significant order backlog in hand.

After entering Norway and Sweden, the US-listed Chinese EV maker XPeng will make its debut in Denmark as soon as this month. The company will inaugurate its first showroom in the Scandinavian country on April 9 and will be located at Vesterbrogade 2, 1550 Copenhagen. The studio location is near Tivoli Gardens, Copenhagen city center.

Written by Cláudio Afonso | info@claudio-afonso.com