A Look At XPeng

This text first seemed on Model Investing on October 20, 2020, when XPeng changed into as soon as priced at $19.84, and has been updated for this text.

Electric automobile manufacturer XPeng Inc. (XPEV), is beginning to achieve very successfully in China and has the likely to upward thrust very rapidly and be a stable competitor to BYD Co. (OTCPK:BYDDF) (OTCPK:BYDDY) and NIO Restricted (NIO) in China. XPeng has already started promoting in a international nation with most modern sales into Norway.

Recently Dapper Technica reported that XPeng’s September deliveries hit a file 3,478 models and eight,578 for the quarter (Q3, 2020). The September result would attach XPeng on a flee charge of 41,736 electric automobile [EV] sales pa, suggesting that XPeng would possibly per chance presumably well exceed 50,000 deliveries in 2021. The September 2020 result changed into as soon as a 145% YoY elevate, and the quarterly result changed into as soon as a 266% YoY elevate. These are impressive boost charges, albeit from a low unhealthy and after a old H1 2020 due to COVID-19.

To study XPeng’s 3,478 sales for September 2020 to what we know from China August 2020 sales, we take into story only 4 companies’ models offered more than XPeng; and XPeng even outsold NIO.

Provide: Yellow highlights by me. Show cloak XPeng is no longer but incorporated on the sales checklist as its 2020 one year total sales are no longer but excessive ample. I seek recordsdata from this to trade soon.

On October 14, Seeking Alpha quoted JPMorgan’s (NYSE: JPM) inspect pointing out (about the China EV market):

“We seek recordsdata from Nio to be a prolonged duration of time winner in the top charge house among Chinese language producers vs. Xpeng main the mass market, whereas BYD would possibly per chance presumably well restful likely take into story stable EV demand with rising external battery sales from 2022,” write analyst Gash Lai and crew. The company believes the NEV market in China is no longer a “winner takes all” but sees a “rising tide lifts all boats” fret.”

XPeng states on its net scheme:

Our Radiant EVs allure to the colossal and rising unhealthy of technology-savvy heart-class patrons in China. We basically target the mid- to excessive-stay section in China’s passenger automobile market.

China wants about 20% of all automobile sales in China to be EVs by 2025; this is in a position to presumably well restful equate to a China addressable market for XPeng of about 4.4m EVs by 2025 (20% of ~22m pa automobile sales in China). If XPeng changed into as soon as in a attach to accumulate a 10% market piece that is more likely to be 440,000 EV sales pa in 2025, plus any out of the nation sales.

XPeng stock trace chart since IPO at $15 – Label = USD 42.18

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About XPeng

XPeng’s ancient previous

Wikipedia states:

Xpeng changed into as soon as co-founded in 2014 (Xpeng net scheme says 2015) by Henry Xia (Xia Heng) and He Tao, venerable senior executives at GAC Community with trip in automobile technology and R&D. Initial backers incorporated He Xiaopeng (now Chairman of Xpeng), founding father of UCWeb and venerable Alibaba government, and Lei Jun, the founding father of Xiaomi. Prominent Chinese language and world investors incorporated Alibaba, Foxconn and IDG Capital. An additional funding round in 2018 noticed Alibaba’s vice chairman Joseph Tsai join the company board of Xpeng.

He Xiaopeng leads XPeng. He also founded UCWeb Inc., the Chinese language cell cyber net machine and restore provider

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XPeng’s two BEV models (G3 SUV and P7 sedan)

XPeng currently sells two battery electric automobile [BEV] models, the G3 SUV and the P7 sedan. Each and every are very successfully designed goal real attempting autos with unusual cosy interiors. They every devour goal real vary (especially the P7) and sell at reasonably priced costs. The G3 is contract manufactured and the P7 is manufactured at XPeng’s manufacturing unit in Zhaoqing, Guangdong Province, China; which has a 100,000 EVs pa ability.

The G3 is an older model on the opposite hand it has been updated, whereas the P7 is newly launched (April 2020) and appears to be very standard (Q3 2020 sales were 6,210 P7s and 2,368 G3s).

CleanTechnica offers a truthful write-up on the two models:

Show cloak: The P7 is more costly but affords greater battery sizes (vary) and better performance (acceleration).

Evaluating the G3 (SUV) to the P7 (sedan)

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XPeng G3 SUV

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XPeng’s two models comprise very nice and cosy interiors and a colossal vary of excessive tech machine

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XPeng P7 sedan

Provide: XPeng

As successfully as XPeng also offers a form of diversified companies to purchasers, together with auto-financing, supercharging carrier, repairs carrier, disappear-hailing carrier and automobile leasing carrier.

XPeng’s present manufacturing unit in Zhaoqing with 100,000 pa ability

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XPeng’s level of distinction and plan

XPeng’s key level of distinction in China is its focal level on being a dapper EV tech company. XPeng’s dapper EVs offer truthful form, prolonged vary and excessive performance, coupled with security and reliability. XPeng’s EVs are loaded with excessive tech aspects. In quite a bit of the way XPeng resembles a younger Tesla (TSLA).

XPeng states:

Its mission is to power Radiant EV transformation with technology and data, shaping the mobility trip of the prolonged flee. In mutter to optimize its possibilities’ mobility trip, XPeng develops in-house its full-stack self reliant riding technology and in-automobile interesting working system, besides core automobile techniques together with powertrain and the electrification/digital structure.

XPeng’s growth plan

Assisted by Guangzhou GET Funding, XPeng is currently having a brand recent dapper EV manufacturing unit in-built Guangzhou, China. Completion is planned for December 2022. Guangzhou GET Funding will fund the manufacturing unit and equipment. The manufacturing unit will then be leased support to XPeng for seven years. After that XPeng will repay Guangzhou GET Funding the costs incurred by Guangzhou GET Funding and successfully then safe the manufacturing unit and equipment. I devour no longer but be taught wherever what the ability shall be for the recent Guangzhou manufacturing unit. I am estimating it would be an identical to its present manufacturing unit ability of 100,000 EVs pa. I devour since be taught that as soon as completed the entire mixed XPeng ability shall be about 250,000 EVs pa.

XPeng sells predominantly in China but has goal lately expanded sales into Europe (Norway).

Administration and prime ten shareholders

Provide: 4-traders

Valuation

XPeng has a market cap of USD 30.99b. Get debt is currently zero and money raised from the August 27 IPO changed into as soon as $1.5b. 4-traders estimates 2020 gain money at CNY 13.1b (~$1.96b).

XPeng’s financials summarized

Xpeng Motors IPO

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XPeng’s financials and forecast financials

the chart below for 2020 to 2022, investors can seek recordsdata from XPeng to devour instant rising revenues and narrowing losses. In all likelihood by 2023 some earnings would possibly per chance presumably well arrive. 4-traders is forecasting money waft particular of CNY 0.69 per piece (~$0.10 per piece) by 2022.

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4-traders reveals analyst’s consensus ‘steal’ with a trace target [PT] of CNY 297, (~$US 45.14) representing about 7% upside.

Most modern recordsdata

  • 12 Nov. 2020 – XPeng reported Third Quarter 2020 unaudited financial outcomes. XPeng EPS missed by $0.14, beat on earnings. XPeng reported a particular scandalous margin in Q3 helped by elevated P7 sales, efficiency improvement, and decreased cloth costs.
  • 2 Nov. 2020 – XPeng automobile shipping outcomes for October 2020. XPeng delivered 3,040 autos in October 2020, a 229% elevate one year over one year. XPeng delivered 17,117 autos one year-to-date 2020, a 64% elevate one year over one year.
  • 4 Oct. 2020 – XPeng broadcasts automobile shipping ends in September and Third Quarter of 2020. XPeng delivered 3,478 autos in September 2020, a monthly file. XPeng delivered 8,578 autos in the third quarter of 2020, a upward thrust of 266% one year on one year. Within the third quarter of 2020, XPeng delivered a total of 8,578 Radiant EVs, consisting of 6,210 P7s and 2,368 G3s, representing a upward thrust of 266% one year over one year. The Company reached one other most important milestone in September by breaking floor for its recent Radiant EV manufacturing unhealthy in Guangzhou, which will drastically boost its future production ability upon estimated completion in December 2022.
  • 27 Sept. 2020 – XPeng broadcasts Cooperation Settlement for New Radiant EV Manufacturing Heinous in Guangzhou….Guangzhou GET Funding agrees to accumulate RMB4 billion [~$586m] in financing to abet gasoline XPeng’s boost……As successfully as to its wholly owned plant in Zhaoqing, Guangdong province, which has an annual production ability of 100,000 models, XPeng’s recent Radiant EV Manufacturing Heinous in Guangzhou will drastically magnify the Company’s production ability and creep XPeng’s momentum to pause its targets in innovation, technological building and boost. Below the Cooperation Settlement, Guangzhou GET Funding will make investments as a lot as RMB1.3 billion to make the Radiant EV Manufacturing Heinous in accordance with form requirements and specifications to be equipped by Guangdong Xiaopeng. The Radiant EV Manufacturing Heinous is anticipated to begin production by December 2022, upon which Guangzhou GET Funding will rent it to an working subsidiary of Guangdong Xiaopeng (the “Working Subsidiary”) for a tenure of seven years. Upon the expiry of the rent, the Working Subsidiary will compose the Radiant EV Manufacturing Heinous from Guangzhou GET Funding at costs incurred by Guangzhou GET Funding. Guangzhou GET Funding also agreed to accumulate or facilitate RMB1.2 billion in financing to the Working Subsidiary for its prefer of manufacturing equipment in the originate of fastened-return redeemable Investment (with an annualized return of 4%) or prolonged-duration of time bank loans that Guangzhou GET Funding will abet the Working Subsidiary to accumulate with effective annual passion charges of no more than 4%, after subsidies which shall be anticipated to be made on hand by the native authorities.
  • 3 Sept. 2020 – XPeng broadcasts inclusion into MSCI Indexes.
  • 27 August 2020 – XPeng broadcasts pricing of Initial Public Offering. XPeng raised ~$1.5 billion at an IPO trace of $15.

Risks

  • Technological trade. For now it looks worship EVs will instant compose market piece; on the opposite hand, this is in a position to presumably well trade.
  • Competition risk. The Chinese language EV house is extremely aggressive.
  • Company dangers – XPeng is burning money (2019 working loss changed into as soon as $535m with negative 24% scandalous margin). Increased sales volumes and scale in 2020-22 would possibly per chance presumably well restful optimistically begin to sight this crimson meat up. Gaze forecast financials chart above. Other company dangers embody management risk, future money owed, liquidity risk, forex dangers etc.
  • US checklist dangers for Chinese language companies. Recently the White house has elevated audit requirements and has threatened to de-checklist Chinese language companies on US exchanges in the event that they attach no longer comply.
  • The frequent stock market dangers – Liquidity, dilution, sentiment.

Additional reading

Videos

XPeng Motors is a dapper EV-tech focused company (P7 sedan shown below) basically based fully in China

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Conclusion

XPeng makes handsome autos and in quite a bit of the way are an identical to an early Tesla, except the main focal level for now would possibly per chance presumably well be on China. XPeng’s two EVs (G3 SUV and P7 sedan) are priced very competitively and sit in the reasonably priced to excessive stay mass market category, mostly targeting the tech-savvy heart-class user in China. JPMorgan goal lately acknowledged it sees “XPeng main the mass market,” which is a extraordinarily nice early call of self belief in XPeng.

Genuine goal lately, helped by the recent XPeng P7 sedan, sales were surging in China, albeit from a low unhealthy. XPeng has also goal lately begun exporting to Europe. XPeng already owns a producing unit in Zhaoqing and has one other one on the manner by gradual 2022 in Guangzhou. Blended that would restful give an estimated ability by 2023 of about 250,000 EVs pa.

Valuation is no longer exactly cheap on a market cap of $30.99b; on the opposite hand it in a roundabout plan is dependent on the success of XPeng and if it’ll train in the footsteps of Tesla and BYD Co.. Absolutely the EV sector looks arena to surge this decade giving XPeng every more than a few to drastically ramp sales, and in time earnings.

Risks lie in the early stage and not using a earnings and money burn ($535m in 2019) and the extra special opponents in the Chinese language EV house. Furthermore it would possibly per chance per chance presumably well restful be remembered that XPeng is a Chinese language company listed on a US replace which technique it carries some further dangers.

Total I deem XPeng is a extraordinarily priceless early-stage guess on what I inspect as ‘the most promising early-stage Chinese language EV company.’ It’s very successfully connected (Gov. toughen) and backed (Alibaba (NYSE: BABA), etc.), seems to devour a truthful chief in He Xiaopeng, has a huge product at an reasonably priced trace with instant bettering most modern sales, is successfully-funded and successfully-placed to instant magnify production ability (before every thing to 100,000 pa then elevated as the Guangzhou manufacturing unit completes in gradual 2022).

I charge XPeng as the most realistic of the newly listed EV companies in China and a speculative steal and deal with (money it’s likely you’ll presumably additionally manage to pay for to lose) for prolonged-duration of time investors with a excessive risk tolerance.

As frequent all feedback are welcome.

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Disclosure: I am/we are prolonged XPEV, TSLA, BYD CO [HK:1211]. I wrote this text myself, and it expresses my safe opinions. I am no longer receiving compensation for it (diversified than from Seeking Alpha). I devour no replace relationship with any company whose stock is talked about in this text.

Additional disclosure: The details in this text is frequent in nature and would possibly per chance presumably well no longer be relied upon as non-public financial advice.

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