The average target price of 9868.HK is 113 and suggests 50% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 150.3. This translates into 100% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 70.4. This is equivalent to 6% downside potential in the worst case. 

XPeng Inc. designs, develops, manufactures, and markets smart electric vehicles in the People's Republic of China. It offers SUVs under the G3 and G3i names; four-door sports sedans under the P7 name; and family sedans under the P5 name. The company also provides sales contracts, maintenance, super charging, vehicle leasing, insurance agency, ride-hailing, technical support, automotive loan referral and auto financing, music subscription, and other services. XPeng Inc. was founded in 2015 and is headquartered in Guangzhou, the People's Republic of China.

China

XPeng Inc.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

9868.HK reported revenue of CNY 40 866mn in the last 12 months, up 33% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 41% from FY23 to CNY -3.89. Market expects EPS to reach CNY -4.25 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 26ppts and its growth decelerated by 5ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -13.4% in the last 12 months, up from -31.3% in FY23. 

Historically, 9868.HK has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -14.2%, a growth from -33.8% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -12.7%, below the peers. The consensus estimate for FY24 for RoCE is -10.9%, again behind the peers. 

XPeng Inc. reported a return on equity (RoE) of -17.1% in the last 12 months, up from -28.3% in FY23. The market consensus projects an RoE of -13.6% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -6.9% in the last 12 months, an increase from -13.3% in FY23. The market analysts predict that RoA will be -5.9% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.2 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

9868.HK boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to bleak profitability, negligible return on capital, poor working capital management, and inadequate interest coverage.

In highly turbulent market conditions, 9868.HK is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 9868.HK is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. 

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XPeng Inc.

HK$ 75.3

2

XPeng Inc.

HK$ 75.3

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

HK$ 75.3

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