Citigroup released a research note stating that XPENG-W (09868) is set to announce its second-quarter results, with the bank projecting a Non-GAAP net loss of approximately RMB 1 billion for the period. The expected comprehensive gross margin stands at roughly 20%, while the automotive gross margin is anticipated to be around 12.5%. Citigroup has maintained a "Buy" rating for the stock, with an H-share target price of HK$87.7.
The bank forecasts third-quarter total deliveries for XPENG-W to be about 130,000 units, falling short of market expectations of 150,000 units. This is attributed to potentially slightly weaker-than-expected July deliveries, the time required for the production ramp-up of the L03 model, and the risk that the L03 (with a gross margin over 10%) may cannibalize sales of the M03 model (which has a low single-digit gross margin). Citigroup also expects the comprehensive gross margin to decline slightly quarter-over-quarter, as a decrease in the proportion of non-automotive revenue offsets the positive impact from an improved model mix.
Looking ahead to the fourth quarter, Citigroup holds a more positive outlook. The GX model, with a gross margin of approximately 20%, is expected to gradually improve the product mix. The high-end G9L model (targeting monthly sales of 5,000 units) will be launched in the fourth quarter, also boasting a gross margin exceeding 20%. Regarding exports, the export share is projected to increase from about 10% in the third quarter to 20% in the fourth quarter, with average monthly export volumes potentially rising from the current 20,000 units to 40,000 units. This is expected to significantly enhance earnings visibility. The L05 model is scheduled for release in October of this year, with exports anticipated to begin in the 2027 fiscal year.
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