With the industry facing multiple challenges such as the supply chain, Xiaopeng Motors handed over a good third-quarter report card with multiple indicators.
According to the Q3 financial report of Xiaopeng Motors (XPEV.NYSE; 9868.HK), its total revenue for the quarter was 6.82 billion yuan (the same below), an increase of 19.3% over the same period in 2021. At the same time, its net loss narrowed by 12% month-on-month, and the improvement in operating efficiency has achieved initial results.
In the conference call after the financial report was released, He Xiaopeng, chairman and CEO of Xiaopeng Motors, released a number of positive signals: its participation in ecological enterprises will be greatly reduced; based on years of investment, three powerful model platforms have been laid out. The R&D time and R&D expenses required for each new product will be greatly reduced; the current cash level of about 40 billion RMB is enough to support the needs of business development in the next few years…
“I believe that we will accelerate the pace of internal organizational change and management improvement in the next few quarters, and we are confident that Xiaopeng (can achieve) the goal of ranking first in the mid-to-long term smart car industry.” He Xiaopeng said.
For this Q3 report card, the capital market also gave positive feedback. On the day the financial report was released, the share price of Xiaopeng Motors soared by more than 47%. According to data from Oriental Fortune Choice, in the past month, nearly 10 brokerage institutions have rated Xiaopeng Motors as buy, increase or recommendation.
The hematopoietic ability is enhanced, and Xiaopeng gathers strength to take off
Key words such as “loss narrowing”, “good cost control” and “gross profit improvement” outline the stable and positive Q3 financial report of Xiaopeng Motors.
After the net loss narrowed by 12.0% month-on-month, Xiaopeng Motors Q3 car sales revenue was 6.24 billion yuan, a year-on-year increase of 14.3%. Automobile sales revenue increased year-on-year due to an increase in its vehicle deliveries. The data shows that Xiaopeng Motors delivered a total of 29,570 vehicles in the quarter, a year-on-year increase of 15%.
At the same time, Xiaopeng Motors’ Q3 sales cost was 5.90 billion yuan, an 11.0% decrease from the 6.63 billion yuan in the second quarter of 2022; its sales, general and administrative expenses for the quarter were 1.63 billion yuan, a 2.3% decrease from the previous quarter.
With the steady increase in delivery volume, sales and management expenses can still be narrowed to a certain extent, which may be attributed to the relatively complete layout of its sales stores and charging network, and the stage of shifting from large-scale construction to refined supplementation. Data show that as of September 30 this year, Xiaopeng Motors’ sales network continued to expand, including 407 stores, covering 143 cities.
It is reported that in the next few quarters, Xiaopeng Motors will further focus on strengthening cost control and improving operational efficiency. Thanks to the layout of the production capacity in the early stage, the demand for capital expenditure of Xiaopeng Motors will drop more significantly in the next few years than this year.
It is worth noting that for a new car company with a large initial investment, a long cycle, and heavy assets, it is unrealistic to achieve profitability in the short term. Tesla has not been profitable for many years after listing for the same reason. However, on the road to profitability, financial indicators such as gross profit margin are quite informative, which to a certain extent reflect the strength of the enterprise’s hematopoietic ability.
According to the financial report, the gross profit margin of Xiaopeng Q3 was 13.5%, an increase of 2.6 percentage points from 10.9% in the previous quarter. For reference, Weilai, which is also a leading player in new forces, has a gross profit margin of 13.3% in Q3.
Under factors such as the price increase of lithium battery materials and supply chain challenges, Xiaopeng’s gross profit rate is quite gold. From the perspective of the industry, it shows that it is better than its peers in terms of supplier bargaining power, and as the proportion of deliveries of P7 and G9 high-margin models continues to increase, Xiaopeng Motors is expected to continue to increase its gross profit margin.
It is reported that Xpeng’s flagship SUV model G9 has started large-scale delivery at the end of October this year. The whole series of the car is equipped with an 800V high-voltage platform and a 3C ultra-fast charging battery pack as standard. He Xiaopeng said that with the large-scale delivery of the G9, the reputation of the G9’s solid battery life and charging speed has won market recognition. “I am confident that G9 will become the top three in the pure electric SUV market with more than 300,000 yuan, and will further narrow the gap with the first place next year with the accumulation of word of mouth.”
In fact, among Wei Xiaoli, Xiaopeng is the first to enter the “100,000 annual sales club”. In October of this year, the cumulative delivery of Xiaopeng Motors during the year exceeded 100,000 units, reaching 103,654 units. “Annual sales of 100,000 vehicles” is regarded by the industry as a landmark node to reach the profit and loss line. After crossing this line, Xiaopeng is gathering strength to take off. According to the plan, starting from the first quarter of next year, Xiaopeng Motors will launch three new products one after another.
The inflection point is approaching, and smart electrification technology enters the payback period
The Q3 financial report also released a signal: With the spare no effort in the research and development investment in the early stage, Xiaopeng Motors is entering the technical payback period.
According to the financial report, Xiaopeng Motors’ research and development expenditure in the third quarter was 1.5 billion yuan, an increase of 18.5% year-on-year and an increase of 18.5% month-on-month. The year-on-year increase was mainly due to the increase in employee salaries due to the increase in R&D personnel, while the quarter-on-quarter increase was mainly due to the increase in new model development expenditures to support future revenue growth.
As the only full-stack self-developed smart electric vehicle company in the world, Xiaopeng has always been very willing to invest in research and development. Taking the R&D investment of auto companies in 2021 as an example, according to the research report of Zheshang Securities, among the five auto companies including BYD, Tesla, and Wei Xiaoli, Xiaopeng’s R&D accounted for the highest proportion of revenue, reaching 19.6%.
Based on the investment in the past few years, Xpeng has laid out three powerful model platforms, including the completed E platform, and the third-generation F platform and H platform planned to be completed next year, laying a solid foundation for product upgrade iterations. technical foundation. Models on these platforms will share a large proportion of power systems, intelligent driving systems, chassis and electrical and electronic architectures, as well as corresponding supply chains and manufacturing capabilities.
In addition, the opening up and cooperation of these platform technologies is expected to become a new growth point for Xiaopeng Motors. He Xiaopeng said that while continuously promoting the research and development of intelligent and electrified technologies, he firmly believes that the industry-leading technologies currently developed by Xiaopeng have huge user value and commercial value to the company. “We remain open to strategic and technical cooperation on a global scale.”
Zheshang Securities Research Report believes that in the medium and long term, the time when the industry accelerates its migration to intelligence is the turning point of Xiaopeng. In He Xiaopeng’s view, the real smart car era will start in the second half of 2023 and gradually expand. Xiaopeng Motors’ leading edge in mass-produced autonomous driving technology will further help the company increase its market share. At present, Xpeng Motors is accelerating the development of the next-generation all-scenario intelligent assisted driving product XNGP. It plans to launch the main functions in the third quarter of 2023 and support at least dozens of cities. With the advancement of technology and the maturity of the supply chain, the hardware cost of XNGP is expected to continue to decline, helping to promote the accelerated popularization of XNGP among users across the country.
Make up for shortcomings and sprint to the “Seven Heroes of the Warring States Period”
“The Spring and Autumn Period and the Warring States Period are more suitable as a metaphor for the current stage of competition. The Spring and Autumn Period was a period of chaotic warfare. There were many princes. In the Warring States Period, there were seven kings. I think the auto industry has also changed from a melee to a few companies occupying a major share. From now on, many people focus on scale. At that time, focus on the overall capabilities, including operations, stability, and supply chain.” He Xiaopeng said in an interview with the media a few days ago, “Now I have done a lot of things, and I think they can reach the Warring States Period.”
In his view, to stay on the card table of smart electric cars in the future, to put it bluntly, it is enough to make up for the shortcomings.
Prior to this, He Xiaopeng initiated an organizational adjustment internally, establishing five committees of product, strategy, technology, sales, and OTA, and three model platforms of E, F, and H. He Xiaopeng personally serves as the director of the product and strategy committee, and the person in charge of the aforementioned platform reports directly to him.
The biggest change in this organizational adjustment is that He Xiaopeng has more in-depth management of products. Among them, the product committee runs through all vertical departments related to products, and the three major model platforms run through the project team of the product development process.
In the Q3 financial report conference call, He Xiaopeng mentioned that in the new organizational structure, his personal participation in the eco-enterprise will be greatly reduced, and he will focus more on the strategy, product planning and R&D of Xiaopeng Motors, so as to promote the transformation and upgrading of the organization. , implement the whole process of production, research, sales and service driven by customer value, and make the company as a whole more focused and efficient. Co-founder Xia Heng also resigned as an executive director of the board of directors, focusing all his work energy on products.
It is advisable to look at the long-term scenery. From the perspective of the industry, this drastic organizational structure adjustment will help Xpeng improve organizational efficiency, reduce communication costs, rejuvenate the enterprise, and lay a good foundation for its subsequent new product launches and scale-up. The China Merchants Securities Research Report pointed out that this structural adjustment will help the company achieve full-process management and improve the efficiency of collaboration between departments.
On the way to make up for the shortcomings and sprint to become the “Seven Heroes of the Warring States Period”, the investment value of Xiaopeng Motors is becoming more and more prominent. Taking ESG scores as an example, Xpeng Motors MSCI ESG rating is AA, the highest rating among global car companies. Rating agency officials believe that Xpeng Motors’ technological innovation and dedicated development in the field of electric vehicles will bring growth opportunities to it in the future. DJSI (Dow Jones Sustainability Index) also updated the latest ESG (Environmental, Social and Governance) rating results of Xiaopeng Motors. Xiaopeng Motors’ ESG score ranked first among new forces and ranked third in the automotive industry.
Under the ESG investment concept, on the basis of analyzing relevant indicators such as the profitability and financial status of the enterprise, investors also examine the value of the company and society from the non-financial perspectives of the environment (Environment), society (Social) and corporate governance (Governance). value. From the perspective of the industry, after investors integrate ESG assessment into investment decisions, they can significantly improve the risk control ability of investment portfolios, reduce portfolio volatility, and improve long-term profitability.
In addition, in the current complex external environment, a company’s cash reserves are crucial to the realization of long-term strategies. According to the financial report, as of the third quarter, Xiaopeng Motors has more than 40 billion cash in hand.
Ping An Securities Research Report stated that with cash reserves of more than 40 billion yuan, Xiaopeng Motors still has room for fault tolerance. “The company is currently experiencing short-term operating difficulties, but the company is undergoing a series of reforms, including organizational structure adjustments and some strategic adjustments. We also believe that the company still has room for adjustments and corrections. With the launch of new models in 2023 , the company’s sales volume and average bicycle price are expected to return to the growth trend.”