CLSA cuts XPeng to Buy following G6 launch

CLSA downgraded Xpeng (NYSE:) to an Outperform rating (From Buy) and raised their 12-month target price to $13.10 (From $10.00) following the launch of the company’s G6 smart electric SUV on Thursday.

Analysts wrote in a note, “Xpeng launched G6 model on 29 June with official price starting from Rmb209,900. We expect G6 could reach 10,000 monthly sales units, helping Xpeng’s sales return to 15,000 units per month in 3Q23. We think the potential launch of XNGP and the government’s supportive attitude should enhance Xpeng’s outlook.”

CLSA has decided not to revise their profit forecast for Xpeng, as they believe that the delivery of the G6 model still requires a capacity climb and carries some uncertainty. Therefore, they continue to maintain their earnings forecasts for 23CL/24CL at RMB 31,376M and RMB 51,198M (RMB 1 = $0.1377), respectively. When it comes to the bottom line, CLSA is of the opinion that Xpeng has not yet achieved the necessary scale effect to fully unleash the potential for net profit growth. Consequently, they also maintain their initial forecast of a net loss of RMB 10,786M and RMB 11,040M for 23CL/24CL, respectively.

The G6 comes in five different editions, among them, the 580 Long Range Max version is the most affordable Xpeng model equipped with XNGP technology, priced at just RMB 220k. With its competitive price, CLSA anticipates that the G6 will maintain a steady monthly sales volume of 10,000 units, which will significantly contribute to Xpeng’s 3Q23 monthly deliveries reaching over 15,000 units. The new G6 models are scheduled to be delivered on June 30th, and those equipped with XNGP assisted driving function may receive simultaneous delivery without the need for OTA updates.

Shares of XPEV are up 8.45% in pre-market trading on Friday.