Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

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

Equity Bottom-Up

<ul>
<li>XPeng C3Q23 top line, non-GAAP operating loss and GAAP net loss in line, 28% and 68% worse than our estimates, main reason is G3’s End-Of-Production charge to the gross margin</li>
<li>We expect XPEV to experience tough transition in 2024 since product line which spans across sedan and SUV, shall experience severe competition at a time when its differentiation is eroding.</li>
<li>We prefer to wait out this period; we cut TP of XPEV from US$18 to US$9 and downgrade to SELL.</li>
</ul>


XPeng C3Q23 top line, non-GAAP operating loss and GAAP net loss in line, 28% and 68% worse than our estimates, main reason is G3’s End-Of-Production charge to the gross margin
We expect XPEV to experience tough transition in 2024 since product line which spans across sedan and SUV, shall experience severe competition at a time when its differentiation is eroding.
We prefer to wait out this period; we cut TP of XPEV from US$18 to US$9 and downgrade to SELL.


[XPeng Inc. (XPEV US, SELL, TP US$9) Rating Change]: Strategic Options May Come Late and Uncertain

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.

<ul><li>Maintain HOLD. Although we see upside potential for Xpeng’s FY24E sales volume and revise it up to 0.26mn units, its low GPM could persist until 1H24E</li><li>. We believe the new-model effect from the G6 has been priced in and its current valuation is fair. Its smart-EV brand image could be challenged by Huawei.</li><li>3Q23 GPM miss. Xpeng’s 3Q23 revenue was 2% lower than we had projected. Even excluding the higher-than-expected inventory write-down for the G3i, GPM in 3Q23 was still worse than our prior forecast, partially reflecting the fierce competition that Xpeng faces.</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 see upside potential for Xpeng’s FY24E sales volume and revise it up to 0.26mn units, its low GPM could persist until 1H24E. We believe the new-model effect from the G6 has been priced in and its current valuation is fair. Its smart-EV brand image could be challenged by Huawei.3Q23 GPM miss. Xpeng’s 3Q23 revenue was 2% lower than we had projected. Even excluding the higher-than-expected inventory write-down for the G3i, GPM in 3Q23 was still worse than our prior forecast, partially reflecting the fierce competition that Xpeng faces.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) – GPM Pressure Persists Despite Possible Sales Beat

Thematic (Sector/Industry)

<ul><li>After a strong sales beat in 2023, we expect China’s passenger-vehicle (PV) sales growth to be moderate in 2024E.</li><li>While it is still difficult to identify long-term winner in China’s auto industry, competition, overseas expansion and technological advancement would still be the key topics for 2024.</li><li>Exports, Chinese brands’ market share gain and competition still key topics.</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.

After a strong sales beat in 2023, we expect China’s passenger-vehicle (PV) sales growth to be moderate in 2024E.While it is still difficult to identify long-term winner in China’s auto industry, competition, overseas expansion and technological advancement would still be the key topics for 2024.Exports, Chinese brands’ market share gain and competition still key topics.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.

China Auto Sector – Competition Pushes Technological Advancement, Overseas Expansion

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.

Equity Capital Markets

Sino-Synergy Hydrogen Energy Technology / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sino-synergy-hydrogen-energy-technology" target="_blank" data-smartkarma-citation="entities:40364:1" rel="noopener">Sino-Synergy Hydrogen Energy Technology (9663 HK)</a> (SHET) is looking to raise around US$200m in its Hong Kong IPO. </li>
<li>SHET is a hydrogen fuel cell company in the PRC focusing on research, development, production and sales of hydrogen fuel cell stacks and hydrogen fuel cell systems.</li>
<li>In this note, we will look at the company’s background and talk about valuations.</li>
</ul>



Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO. 
SHET is a hydrogen fuel cell company in the PRC focusing on research, development, production and sales of hydrogen fuel cell stacks and hydrogen fuel cell systems.
In this note, we will look at the company’s background and talk about valuations.


Sino-Synergy Hydrogen IPO - High Potential but Comes with Ample Issues

<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

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.

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

XPeng (XPEV US)

[XPeng Inc. (XPEV US, SELL, TP US$9) Rating Change]: Strategic Options May Come Late and Uncertain

XPeng reported Q3 2023 results with losses worse than expected due to an End-Of-Production charge, and faces tough competition and eroding...

Blue Lotus Research Institute

Xpeng Inc. (XPEV US) – GPM Pressure Persists Despite Possible Sales Beat

Maintain HOLD. Although we see upside potential for Xpeng’s FY24E sales volume and revise it up to 0.26mn units, its low GPM could persist until 1H24E

CMB International

China Auto Sector – Competition Pushes Technological Advancement, Overseas Expansion

While it is still difficult to identify long-term winner in China’s auto industry, competition, overseas expansion and technological advancement...

CMB International

Sino-Synergy Hydrogen IPO - High Potential but Comes with Ample Issues

Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO. In this note we look at its past...

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

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[XPeng Inc. (XPEV US, SELL, TP US$9) Rating Change]: Strategic Options May Come Late and Uncertain

​XPeng reported Q3 2023 results with losses worse than expected due to an End-Of-Production charge, and faces tough competition and eroding...

Blue Lotus Research Institute

Xpeng Inc. (XPEV US) – GPM Pressure Persists Despite Possible Sales Beat

Maintain HOLD. Although we see upside potential for Xpeng’s FY24E sales volume and revise it up to 0.26mn units, its low GPM could persist until 1H24E

CMB International

China Auto Sector – Competition Pushes Technological Advancement, Overseas Expansion

While it is still difficult to identify long-term winner in China’s auto industry, competition, overseas expansion and technological advancement...

CMB International

Sino-Synergy Hydrogen IPO - High Potential but Comes with Ample Issues

Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO. In this note we look at its past...

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 reported Q3 2023 results with losses worse than expected due to an End-Of-Production charge, and faces tough competition and eroding...