Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Maintain HOLD. Although we revise up Xpeng’s FY24E sales volume forecast to 0.22mn units following the G6’s aggressive pricing, its low GPM could persist, especially with two new models next year likely to be priced below the G6.</li><li>We project single-digit GPM for FY24E and we believe its current valuation is fair.</li><li>2Q23 ASP and GPM miss. Xpeng’s 2Q23 revenue was 6% lower than we had expected, largely due to increased sales promotion, in our view.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Maintain HOLD. Although we revise up Xpeng’s FY24E sales volume forecast to 0.22mn units following the G6’s aggressive pricing, its low GPM could persist, especially with two new models next year likely to be priced below the G6.We project single-digit GPM for FY24E and we believe its current valuation is fair.2Q23 ASP and GPM miss. Xpeng’s 2Q23 revenue was 6% lower than we had expected, largely due to increased sales promotion, in our view.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xpeng Inc. (XPEV US) – 2Q23 GPM Miss; Still a Long Way for Healthy GPM

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>VW’s long-term software dilemma caused delays of new EV model launch. Thus, leveraging established software capability of Xpeng could help VW catch up and shorten its R&amp;D cycle.</li>
<li>We see two benefits for Xpeng: 1) a new revenue stream from tech licensing and potential reduction of supply chain costs; 2) VW’s endorsement  could help Xpeng’s overseas expansion.</li>
<li>We think the potential of Xpeng’s high-margin tech licensing being opened to more VW models and other OEMs. Our TP implies 2.5x 2024PS</li>
</ul>


VW’s long-term software dilemma caused delays of new EV model launch. Thus, leveraging established software capability of Xpeng could help VW catch up and shorten its R&amp;D cycle.
We see two benefits for Xpeng: 1) a new revenue stream from tech licensing and potential reduction of supply chain costs; 2) VW’s endorsement  could help Xpeng’s overseas expansion.
We think the potential of Xpeng’s high-margin tech licensing being opened to more VW models and other OEMs. Our TP implies 2.5x 2024PS


[XPeng(XPEV US, BUY, TP US$24.3)TP Change]: Potential of Tech Licensing and EV Sales Lifts Valuation

<ul>
<li>We are more positive on G6’s potential due to attractive pricing and higher conversion rate brought by nationwide availability of display vehicles. </li>
<li>The success of G6 will add visibility of its growth due to the shared architecture.  We reiterate a rebound of sales momentum starting from 2Q23, driven by: </li>
<li>1) increased order intake of P7i and G6; 2) faster channel expansion than its peers. We raise our TP to US$ 13.7. Our TP implies 2.5x PS.</li>
</ul>


We are more positive on G6’s potential due to attractive pricing and higher conversion rate brought by nationwide availability of display vehicles. 
The success of G6 will add visibility of its growth due to the shared architecture.  We reiterate a rebound of sales momentum starting from 2Q23, driven by: 
1) increased order intake of P7i and G6; 2) faster channel expansion than its peers. We raise our TP to US$ 13.7. Our TP implies 2.5x PS.


[XPeng Inc. (XPEV US, BUY, TP US$13.7) Target Price Change]: Buy on More Visibility of Future Growth

<ul><li>We downgrade Xpeng to HOLD from Buy, as we believe its lingering issues, such as product positioning and low margins may not be resolved this year.</li><li>We believe both G6 and the new MPV could miss management’s expectation given the competitive landscape and unclear positioning.</li><li>The failure of the upmarket move by the G9 could have much more severe dent on Xpeng in the long term, in our view. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We downgrade Xpeng to HOLD from Buy, as we believe its lingering issues, such as product positioning and low margins may not be resolved this year.We believe both G6 and the new MPV could miss management’s expectation given the competitive landscape and unclear positioning.The failure of the upmarket move by the G9 could have much more severe dent on Xpeng in the long term, in our view. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xpeng Inc. (XPEV US) – Lack of turnaround signals in 2023

China

XPeng Inc. designs, produces, and distributes electric vehicles. The Company designs, develops, manufactures and markets smart smart electric vehicles, as well as finance, parts, and maintenance services. XPeng serves customers in China.

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XPeng (XPEV US)

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Xpeng Inc. (XPEV US) – 2Q23 GPM Miss; Still a Long Way for Healthy GPM

2Q23 ASP and GPM miss. Xpeng’s 2Q23 revenue was 6% lower than we had expected, largely due to increased sales promotion, in our view.

CMB International

[XPeng(XPEV US, BUY, TP US$24.3)TP Change]: Potential of Tech Licensing and EV Sales Lifts Valuation

VW’s long-term software dilemma caused delays of new EV model launch. Thus, leveraging established software capability of Xpeng could help VW catch...

Blue Lotus Research Institute

[XPeng Inc. (XPEV US, BUY, TP US$13.7) Target Price Change]: Buy on More Visibility of Future Growth

We reiterate a rebound of sales momentum starting from 2Q23, driven by 1) increased order intake of P7i and G6; 2) faster channel expansion than...

Blue Lotus Research Institute

Xpeng Inc. (XPEV US) – Lack of turnaround signals in 2023

We downgrade Xpeng to HOLD from Buy, as we believe its lingering issues, such as product positioning and low margins may not be resolved this year.

CMB International

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