进入良性循环

Xpeng Inc. (XPEV US/9868 HK) Entered a virtuous circle MaintainBUY.Xpeng’s1Q25earningsbeatonGPMandgovernmentsubsidies. We further raise our FY25E sales volume and GPM forecasts giventhe current sales momentum and more new modelrollouts in 2H25.We are ofthe view that Xpeng may achieve a breakeven at the net level in 3Q25.Suchprofit growth path has helped Xpeng enter a virtuous circle with more R&Dinvestments and even higher profits, in our view. China Auto 1Q25 earnings beat on GPMand government subsidies.Xpeng’s 1Q25revenue beat our prior forecast by 1.7%, mainly due to higher-than-expected average selling price (ASP).Vehicle GPM of 10.5% in 1Q25 wasin line with our forecast, while GPM for services and others was about10ppts higher than our projection. SG&A and R&D expenses combinedwere about RMB180mn higher than expected, which was offset by highergovernment subsidies.Net loss of RMB664mn was about RMB260mnnarrower than our forecast. Both operating loss and net lossexcludingextraordinary items were largely in line with our prior forecasts. 12-mth Price Performance ImprovingprofitabilitycouldsupportmorenewmodelsandAIinvestments.We raise our FY25E sales volume forecast by 20,000 unitsto 460,000 units amid strong sales in the first four months of 2025 andmore new model rollouts in 2H25.We revise up FY25E vehicle GPM from11.3% to 12.0%, as new models with higher GPMs are to contribute moresales.We are of the view that it is possible for Xpeng to achieve abreakeven at the net level in 3Q25.A guidance of 32% YoY increase inR&D expenses in FY25E meansa good number of new modelscould beunveiledin FY26E. Xpeng’s proprietary AI chip plans to be equipped from3Q25 means another big step forward in autonomous driving progress. Earnings/Valuation.We revise our FY25E net loss from RMB1.7bn toRMB0.9bn after raising sales volume and GPM forecasts.We also reviseup FY26E GPM by 1.2ppts to 16.8%. We raise our FY26E net profit fromRMB1.2bn to RMB3.7bn, by taking a possible tax credit into consideration.We maintain our BUY rating andADR/H-sharetarget price of US$28.00/HK$110, still based on 1.8xour FY26E P/S(unchanged). We think avaluation that is slightly higher than peers is justified given its leading AIcapabilities and clearer profit growthpath. Key risks to our rating and targetprice include lower sales volume and/orGPM than we expect, slowermonetization timeline for robotsand a sector de-rating. Disclosures& Disclaimers AnalystCertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, theanalyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in thisreport; and (4) have any financial interests in the Hong Kong listed companies covered in this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% overnext 12 monthsSELL: Stock with potential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGM :Industry expected to outperform the relevant broad market benchmark over next 12 months:Industry expected to perform in-line with the relevant broad market benchmark over next 12 months:Industry expected to underperform the relevant broad market benchmark over next 12 monthsGlobal MarketsLimited Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International CapitalCorporation Limited (a wholly ownedsubsidiary of China Merchants Bank) Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable for the purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to the individual investment objectives, financial positionor special requirements. Past performance has no indication of future performance, and actual events may differ materially from that which is contained in thereport.The value of, and returns from, any investments are uncertain and are not guar