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XPENG-W: The performance has indeed "cooled down", when will it recover?

XPENG-W released its Q1 2023 financial report after the Hong Kong and US stock markets closed on May 24, 2023. The key points are as follows:

1. Gross profit turned into gross loss: Due to subsidy withdrawal and price competition, XPENG-W's gross profit turned negative with a gross profit margin of -2.5%. Dolphin Analyst saw that the general expectation of the industry was at the break-even gross profit margin level, but the actual result was worse than expected.

2. Sales volume in the first half of the year is not optimistic: The sales volume in the first quarter finally reached slightly over 18,000 vehicles, which was slightly lower than the company's original expectation of 18,000-19,000 vehicles. The sales volume in the first quarter was already average.

The company's sales volume guidance for the second quarter is 21,000-22,000 vehicles. Since the sales volume of 7,000+ in April has been announced, it implies that the delivery in May and June is not significantly improved compared to April, which is about 7,000-7,500 vehicles. Previously, the company hoped that the monthly delivery after stabilization could reach 15,000 vehicles, but it is obviously hopeless in the first half of the year.

The market originally hoped that the P7i, which had good order inflows in the later two months, could solve the supply chain problem and increase sales. Now this guidance either means that the production capacity ramp-up is not ideal, or other models' sales decline too fast.

At the same time, the market also hoped that the G6, which starts at more than 200,000 yuan and will be delivered in early June, could drive sales and achieve a monthly sales volume of 9,000-10,000 when it comes out of the first half of the year. This guidance basically extinguished this hope.

3. The overall revenue guidance for the second quarter is 4.5-4.7 billion yuan. Based on the sales volume guidance of 21,000-22,000 vehicles, the average unit price in the second quarter should be around 182,000-190,000 yuan, which is still declining compared to the unit price in the landslide area (193,000 yuan). This price trend is not a good sign for the improvement of the second quarter's automobile gross profit margin. Even if the pressure of lithium ore prices is reduced, its gross profit margin is still difficult to improve significantly.

4. Due to the mistake of the new car G9, the sales volume plummeted by 47% year-on-year, and XPENG-W followed Tesla to reduce prices due to intensified competition. The overall revenue in the first quarter was 4 billion yuan, which was also at the low end of the company's guidance and lower than the market's expected 4.2 billion yuan.

5. Is there really a cost reduction and efficiency improvement? In the conference call of the previous quarter, XPENG-W described a story of cost reduction through technology and efficiency improvement through operation. From the implementation in the first quarter, there was no sign of cost reduction through technology, and there was some progress in efficiency improvement: R&D expenses were basically stable, and sales expenses were controlled to some extent by reducing the commission for joining stores and reducing marketing expenses.

6. Selling cars at a gross loss, and operating losses further widened: Due to the poor gross profit margin of the automobile business in this quarter, there is little room for R&D cost reduction, and the frugality of sales cannot make up for the gross loss of the automobile business. The actual operating loss, excluding equity incentives, was 2.5 billion yuan, which was slightly worse than the market's expectation.

Dolphin Analyst's overall view:

Overall impression: Knows the gap, but the gross profit margin has turned into -2.5%, and the sales volume in the second quarter still has no obvious improvement, which is a bit alarming.

In the last review, Dolphin Analyst emphasized that low valuation + cash abundance means that its stock price has a bottom, and the company's management team did three important positive guidance in the last quarter: technology cost reduction + operation efficiency improvement + P7i's in-store traffic has greatly increased. In the future, coupled with the fact that the market has indeed seen that the delivery time of P7i is indeed longer (there are indeed orders, plus production capacity release issues), the company's stock price is actually relatively stable during this period, and the valuation has also been repaired slightly from the bottom to 2 times PS.

However, in this answer sheet, whether it is the gross profit margin in the first quarter or the sales volume guidance in the second quarter, it has poured cold water on the market's current expectations, which also means that the short-term stock price of XPENG-W may still need to be adjusted. Without the incremental benefits of next month's delivery, the upward space of XPENG-W's short-term stock price is limited.

However, from the perspective of the replacement cycle, the second quarter is probably the worst performance bottom of XPENG-W:

P7i itself has inventory orders, and the supply chain problem will be solved in the second half of the year, and the sales volume release certainty is high. As a pure electric SUV with a starting price of around 220,000 yuan, G6 still has the possibility of competing for Tesla orders, and the company has also given a relatively optimistic monthly delivery judgment.

Therefore, after the adjustment of XPENG-W's stock price, it is worth paying close attention to its delivery situation, especially the delivery dynamics of G6 and the new P7. After the bottoming out, there is still hope in the second half of the year.

The following are the detailed charts of XPENG-W's financial report:

1. Sales slump

2. Single vehicle gross profit margin collapses

3. Other key indicators

Dolphin Analyst's in-depth research and tracking comments on XPENG-W include:

Financial Report Season

March 17, 2023 Conference Call: "XPENG-W 2023: Reform, Cost Reduction, and New Product Launches (22Q4 Conference Call Summary)"

March 17, 2023 Financial Report Comments: "XPENG-W: Target of Criticism, Can It Survive the Crisis?"

November 30, 2022 Conference Call: "XPENG-W's Stock Price Soars Nearly 50% Overnight, What Did They Say on the Conference Call? (Summary)"

November 30, 2022 Financial Report Comments: "[Despite Poor Performance, XPENG-W's Stock Price Still Rises? It Still Needs to 'Remodel Its Bones'] (https://longbridgeapp.com/en/topics/3705081)"

August 24, 2022 Conference Call: "G9 and B-Class 'Tesla', or XPENG-W's Last Effort (22Q2 Conference Call)"

August 23, 2022 Financial Report Comments: "[XPENG-W is Far from 'Making Money'] (https://longbridgeapp.com/topics/3360096)"

May 24, 2022 Conference Call: "XPENG-W: The Third Quarter is When the Price Increase Results and Gross Margin Significantly Rebound (Meeting Summary)"

May 23, 2022 Financial Report Comments: "Sales Leader, Loss King, Does the Market Still Buy XPENG-W's Story?"

March 29, 2022 Conference Call: "Rapid Channel Expansion Opens Up the Ceiling for XPENG-W's Delivery Volume (2021 Q4 Earnings Conference Call Summary)"

March 28, 2022 Financial Report Comments: "[XPENG-W Sells More and Loses More, Is It a Joke or a Bull?](https://longbridgeapp.com/topics/2202663?channel=t2202663&invite-code=FRQWBJ)》

Telephone Meeting Summary on November 23, 2021: XPENG-W: Exploring the Robotaxi Business, Advancing Intelligence?

Financial Report Review on November 23, 2021: XPENG-W: How Far is it from the "Chinese Version of Tesla" to Win the Annual Championship of New Forces?

Telephone Meeting Summary on August 26, 2021: XPENG-W: Roll Up Sleeves and Work Hard

Financial Report Review on August 26, 2021: XPENG-W: Healthy Financial Report, Full of "Intelligent" Heart

Telephone Meeting Summary on May 14, 2021: XPENG-W Q1 2021 Performance Telephone Meeting Summary

Financial Report Review on May 13, 2021: XPENG-W: Negative Tesla and Exceeding Expectations of XPENG-W, Who Do You Pick?

Telephone Meeting on March 9, 2021: XPENG-W's Q4 Telephone Conference, Not Inferior to Financial Report?

Live Broadcast:

November 30, 2022: XPENG-W-W (09868.HK, XPEV.US) Q3 2022 Earnings Conference Call

August 23, 2022: XPENG-W (XPEV.US/09868.HK) Q2 2022 Earnings Conference CallOn May 23, 2022, XPENG-W (XPEV.US/09868.HK) 2022 Q1 Earnings Call was held.

On March 28, 2022, XPENG-W (XPEV.US/09868.HK) 2021 Q4 Earnings Call was held.

On November 23, 2021, XPENG-W (XPEV.US) 2021 Q3 Earnings Call was held.

On September 15, 2021, XPENG-W P5 Super Launch Event was held.

On August 26, 2021, XPENG-W (XPEV.US) 2021 Q2 Earnings Call was held.

On May 13, 2021, XPENG-W (XPEV.US) 2021 Q1 Earnings Call was held.

On April 14, 2021, XPENG-W P5 New Car Launch Event was held.

Risk Disclosure and Statement in this article: Dolphin Analyst Disclaimer and General Disclosure

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