IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/xpeng-inc" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng (XPEV US)</a> is a leading BEV (battery electric passenger vehicle) company in China. XPeng current vehicle line-up consists of an SUV (the G3 which commenced deliveries in December 2018) and a four-door sports sedan (the P7 which commenced deliveries in May 2020). XPeng had a market share of 2.0% in the China NEV (new energy passenger vehicles) market and 4.7% in the mid- to high-end segment of the China NEV market in 2020, according to IHS Markit. XPeng has launched an HKEx secondary listing by offering 85 million new Class A ordinary shares. At the maximum offer price of HK$180.00 per share, the gross proceeds will be $2.0 billion. The secondary listing comes on the back of a listing on the NYSE in August 2020 ($1.4 billion net raise at $15.00 per ADS) as well as a follow-on offering in December 2020 ($2.5 billion gross raise at $45.00 per ADS).<div class="content-highlight">Despite rising competition, XPeng is delivering on its IPO promise by growing market share, enhancing the model line up and delivering a positive gross margin trajectory. XPeng is also further solidifying its brand recognition and leadership of full-stack in-house developed autonomous driving solutions. On balance, for investors seeking exposure to the China NEV sector, XPeng’s fundamentals and valuation are attractive, in our view. </div>

Xpeng (XPEV US) is a leading BEV (battery electric passenger vehicle) company in China. XPeng current vehicle line-up consists of an SUV (the G3 which commenced deliveries in December 2018) and a four-door sports sedan (the P7 which commenced deliveries in May 2020). XPeng had a market share of 2.0% in the China NEV (new energy passenger vehicles) market and 4.7% in the mid- to high-end segment of the China NEV market in 2020, according to IHS Markit. XPeng has launched an HKEx secondary listing by offering 85 million new Class A ordinary shares. At the maximum offer price of HK$180.00 per share, the gross proceeds will be $2.0 billion. The secondary listing comes on the back of a listing on the NYSE in August 2020 ($1.4 billion net raise at $15.00 per ADS) as well as a follow-on offering in December 2020 ($2.5 billion gross raise at $45.00 per ADS).Despite rising competition, XPeng is delivering on its IPO promise by growing market share, enhancing the model line up and delivering a positive gross margin trajectory. XPeng is also further solidifying its brand recognition and leadership of full-stack in-house developed autonomous driving solutions. On balance, for investors seeking exposure to the China NEV sector, XPeng’s fundamentals and valuation are attractive, in our view. 

Xpeng Secondary Listing: The Battle to Rule the Teslaverse

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

In last week's Compass we highlighted what we view as compelling signals that risk appetites are improving, which is bullish for the broad market. The trend of improving risk appetites has only continued over the past week and we are moving toward an outright bullish outlook.

In last week's Compass we highlighted what we view as compelling signals that risk appetites are improving, which is bullish for the broad market. The trend of improving risk appetites has only continued over the past week and we are moving toward an outright bullish outlook.

U.S. Equity Strategy: Small-Caps Re-Emerging As Leadership

China Specialist, Auto and Industrial Specialist

Victoria Li

Thematic (Sector/Industry)

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales increased by 4%, from 6.4% in April. Chip shortage issue might be bottoming.Except Xpeng, the deliver of the main EV brands decreased MoM, indicating EV segment sales might decreased slightly MoM due to seasonality. According to posts on social media (not official source), Tesla China's order in May was halved. However, its delivery in China is estimated to increase by 88% MoM. Negative impact from recent PR Crisis related to 'brake failure' or 'sudden acceleration' appears to have been quite limited.Xpeng (XPEV.US) and Geely (175.HK) remain our favourites among emerging EV brands and traditional OEMs  respectively.

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales increased by 4%, from 6.4% in April. Chip shortage issue might be bottoming.Except Xpeng, the deliver of the main EV brands decreased MoM, indicating EV segment sales might decreased slightly MoM due to seasonality. According to posts on social media (not official source), Tesla China's order in May was halved. However, its delivery in China is estimated to increase by 88% MoM. Negative impact from recent PR Crisis related to 'brake failure' or 'sudden acceleration' appears to have been quite limited.Xpeng (XPEV.US) and Geely (175.HK) remain our favourites among emerging EV brands and traditional OEMs  respectively.

China Auto: End Demand Keeps Getting Better; Chip Shortage Bottoms

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Equity Bottom-Up

In 5M, <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>  China received ~72K orders for MIC M3, plus 22K backlog orders exiting 2020.  GF3 made 103K M3 in 5M, among which 69K were delivered in China and 29K were exported.  The estimated order backlog exiting May was ~25K, slightly down from 26K backlog exiting April.  Excess production at the GF3 has been exported to markets around the world.  If TSLA China does not implement effective promotional programs and or policies to stimulate demand, we estimate that MIC 3 orders will stagnate around 9K per month, vs. monthly production of ~21K.  In other words, MIC 3 exports are likely to increase MoM due to the lower cost structure including BoM of MIC cars.

In 5M, Tesla Motors (TSLA US)  China received ~72K orders for MIC M3, plus 22K backlog orders exiting 2020.  GF3 made 103K M3 in 5M, among which 69K were delivered in China and 29K were exported.  The estimated order backlog exiting May was ~25K, slightly down from 26K backlog exiting April.  Excess production at the GF3 has been exported to markets around the world.  If TSLA China does not implement effective promotional programs and or policies to stimulate demand, we estimate that MIC 3 orders will stagnate around 9K per month, vs. monthly production of ~21K.  In other words, MIC 3 exports are likely to increase MoM due to the lower cost structure including BoM of MIC cars.

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China. Based on available data, we estimate sales growths of both auto sector shipment and end demand in April 2021(vs. April 2019) to accelerate. OEMs shipment accelerated as well, which might be a good sign that chips shortage started easing.According to individual EV makers' latest sales data, China's NEV sales might be flattish MoM. It continues outperforming the overall auto market. In April, Xpeng(XPEV.US) car sales increased slightly MoM, while NIO's (NIO.US) sales decreased slightly MoM due to chip shortage. Li Auto's (LI.US) April sales  grew 13% MoM.

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China. Based on available data, we estimate sales growths of both auto sector shipment and end demand in April 2021(vs. April 2019) to accelerate. OEMs shipment accelerated as well, which might be a good sign that chips shortage started easing.According to individual EV makers' latest sales data, China's NEV sales might be flattish MoM. It continues outperforming the overall auto market. In April, Xpeng(XPEV.US) car sales increased slightly MoM, while NIO's (NIO.US) sales decreased slightly MoM due to chip shortage. Li Auto's (LI.US) April sales  grew 13% MoM.

China Auto: Early Positive Signs of Chips Shortage Easing

China

Li Auto Inc. manufactures automobiles. The Company designs, develops, and sells smart new energy electric sport utility vehicles. Li Auto conducts businesses in China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Li Auto (LI US)

Xpeng Secondary Listing: The Battle to Rule the Teslaverse

XPeng has launched an HKEx secondary listing to raise proceeds of $2 billion. For investors seeking exposure to the China NEV sector, XPeng’s...

Arun George

U.S. Equity Strategy: Small-Caps Re-Emerging As Leadership

We continue to see compelling signals that suggest risk appetites are improving, which is bullish for the broad market. As a result, we are moving...

Vermilion Research

China Auto: End Demand Keeps Getting Better; Chip Shortage Bottoms

Compared to corresponding period in 2019, China's PV retail sales in May increased by 5%, slightly better than that of April, while wholesale sales...

Victoria Li

TSLA China Losing to Chinese NEV OEMs

TSLA will begin to experience excess production of the Y in the next couple of months, as the China order backlog wanes from 43KQ1 to 17K Q2. Y...

JL Warren Capital

China Auto: Early Positive Signs of Chips Shortage Easing

Official sales data about China's April auto sector might be released later than usual, due to long holiday of Labour Day in China.

Victoria Li

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)