Category: Earnings Preview

XPeng Q1 earnings preview: Counting down to G6

XPeng's financial performance in the first quarter and its outlook for the second quarter will be weak, though the company may see a turnaround after the launch of G6, according to Edison Yu's team.

XPeng Q1 earnings preview: Counting down to G6-CnEVPost

(Image credit: CnEVPost)

XPeng (NYSE: XPEV) will report its unaudited financial results for the first quarter on May 24 before the US markets open. As usual, Deutsche Bank analyst Edison Yu's team provided their preview.

XPeng's performance will be weak in the first quarter and the outlook for the second quarter is likely to be subdued, but a turnaround in the second half of this year may be in the cards after the launch of the new SUV G6, according to a research note sent to investors today.

First quarter earnings

Previously released data showed that XPeng delivered 18,230 vehicles in the first quarter, slightly above the lower end of the guidance range of 18,000 to 19,000 vehicles.

The company's previous revenue guidance for the first quarter was RMB 4 billion to RMB 4.2 billion, a decrease of about 43.7 percent to 46.3 percent year on year.

XPeng sales have been weak since the second half of last year, with deliveries of just 5,218 units in January. It rebounded to 7,079 units in April, essentially flat from March.

Yu's team expects XPeng to report revenue of RMB 4.04 billion and adjusted earnings per share of RMB -2.52 for the first quarter.

The team expects XPeng's gross margin to be 5.0 percent and vehicle margin to be 0.4 percent in the first quarter, or down 530 basis points sequentially, as price cuts and promotions hurt margins.

This compares to the current consensus analyst estimates of RMB 4.24 billion, 6.1 percent and RMB -2.09, respectively, in a Bloomberg survey.

Subdued second quarter

Yu's team believes that XPeng deliveries are likely to be subdued in the second quarter as the G9 has struggled to gain order flow and supply constraints have hampered P7i deliveries.

G9 sales have been below 1,000 units for the past three months, and a summer price cut is likely, the team said.

XPeng management has said that orders for the P7i have increased unexpectedly and will increase more meaningfully in June and beyond. As a result, Yu's team expects XPeng to guide for low-mid 20,000 range second-quarter deliveries.

Deliveries of the upcoming G6 will begin in late June and the model will not make a significant contribution in the second quarter, according to the team.

G6 is the swing factor

In the company's fourth-quarter earnings call on March 17, XPeng management said the G6 will be officially launched and delivered by the end of the second quarter, with a price range of RMB 200,000 ($28,590) to RMB 300,000.

XPeng's monthly sales target for the G6 is 2-3 times that of the P7, He Xiaopeng, the company's chairman and CEO, said during the call.

XPeng unveiled a new architecture called SEPA (Smart Electric Platform Architecture) 2.0 at a technology conference in Shanghai on April 16, saying the G6 will be the first model built on the architecture.

The architecture will shorten the development cycle of future models by 20 percent and optimize development efficiency significantly. Interchangeability and interoperability of common and modular components between new models will reach 80 percent, enabling XPeng to meet diverse customer needs at an optimized cost, it said at the time.

Yu's team believes that the G6 will need to be successful for XPeng to be truly relevant again in the marketplace.

On a relative basis, XPeng management sees the G6 selling 2-3 times as many units as the P7, which means at least more than 5,000 units per month, according to Yu's team.

"Our view is XPeng will price G6 below Model Y in hopes of attracting consumers with its sleeker design and newer interior," the team wrote.

With the increased production of the G6, XPeng management believes total monthly deliveries could reach 15,000 units at some point in the third quarter.

"This seems achievable and we model XPeng reaching this level in Sep with potentially some help from a midcycle P5 face-lift ('P5i')," the team said.

($1 = RMB 6.9959)

XPeng G6 debuts at Shanghai auto show

The post XPeng Q1 earnings preview: Counting down to G6 appeared first on CnEVPost.

For more articles, please visit CnEVPost.

XPeng earnings preview: Q4 to be soft with promotions hitting margins

"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," Edison Yu's team said.

US | XPeng HK

XPeng (NYSE: XPEV) will report fourth-quarter earnings on Friday, and as usual, Deutsche Bank analyst Edison Yu's team provided their preview.

"We expect generally soft results and a weak 1Q23 outlook due to challenging demand and pricing dynamics," the team said in a research report sent to investors yesterday.

Soft fourth-quarter

XPeng will report its unaudited financial results for the fourth quarter and fiscal 2022 on Friday, March 17, before the US markets open.

It delivered 22,204 vehicles in the fourth quarter, above the upper end of the guidance range of 20,000 to 21,000, but down 46.82 percent year-on-year and down 24.91 percent from the third quarter.

XPeng's previous revenue guidance for the fourth quarter was RMB 4.8 billion to RMB 5.1 billion, representing a year-on-year decrease of about 40.4 percent to 43.9 percent.

"We expect a soft quarter with deliveries already reported at 22,204, above management's guidance range (20,000-21,000), but with promotional activity hitting margins," Yu's team wrote.

The team expects XPeng to post revenue of RMB 5.4 billion yuan and a gross margin of 11.5 percent in the fourth quarter.

They expect XPeng's vehicle margin to be 8.5 percent in the fourth quarter, down 3.1 percentage points from the third quarter, and adjusted earnings per share of RMB -2.33.

The current analyst consensus in the Bloomberg survey is for revenue of RMB 5.7 billion, gross margin of 12.1 percent and adjusted EPS of RMB -2.25.

For the first quarter, Yu's team expects deliveries to be around 19,000-20,000 units and for gross margin to drop to single digits as price cuts take hold.

XPeng deliveries in January and February were 5,218 and 6,010 units respectively, for a cumulative total of 11,228 units. Insurance registration figures for the past two weeks suggest that the company did not see a significant improvement in deliveries in March.

Uncertainty in 2023

The key to XPeng's relevance going forward is to win back market share, and that could take several quarters to achieve, which has created significant uncertainty this year, Yu's team said.

Demand for the company's flagship SUV, the G9, has clearly been disappointing, despite mostly positive reviews, the team said, adding that they expect XPeng to potentially make pricing or SKU adjustments to the SUV in the coming months.

XPeng's new P7i sedan should help with order volume, but there won't be materially beneficial until the second quarter, the team said.

Most importantly, XPeng's upcoming Model Y competitor, the G6, needs to reach at least 5,000 units per month by the end of the year to be considered a success, the team said.

The team now expects XPeng to be on track to deliver 145,000 vehicles in 2023, a 10,000-unit downward revision from earlier, taking into account the decline in G9 sales.

How can capacity utilization be improved?

If XPeng's sales continue to be weak, its management may need to get creative to improve its capacity utilization, Yu's team said, adding that the easiest way to do that would be to sign some large fleet deals.

That may be hard in China, considering and GAC have stronger positions in the taxi and ride-sharing segment, but XPeng recently signed deals with some local car rental companies to buy its P7 sedan, the team noted.

XPeng entered into a strategic partnership with local car rental company eHi Car Services on July 19, 2022, and delivered the first few hundred cars to the latter.

On January 9 this year, XPeng signed agreements with car rental company China Auto Rental and 's travel service platform Xiaolinggou Travel Technology, and completed the delivery of the first XPeng P7 vehicles in Ningbo, Zhejiang province.

In addition, XPeng has restarted its expansion efforts in Europe, where large fleet deals could make sense due to the region's high percentage of corporate fleets and low availability of cheap BEV options, Yu's team said.

"We note BYD has an agreement with SIXT for 100,000 EVs and XPeng's vehicles fall into a similar price point. BYD also just announced a 5,000 unit agreement with UK's Octopus EV," the team wrote.

Another option is to partner more deeply with traditional OEMs on EVs and robotaxis, which could come in the form of equity investments or strategic alliances, according to the team.

XPeng offering discounts to clear P7 inventory, facelift to launch next week, report says

The post XPeng earnings preview: Q4 to be soft with promotions hitting margins appeared first on CnEVPost.

For more articles, please visit CnEVPost.