XPeng (XPEV.US) was upgraded to Buy from Hold in a report issued by Daiwa, reflecting the company's ability to improve the gross margin by providing technical R&D services to Volkswagen. The broker believed that any collaboration with Volkswagen or likely other OEMs will help the company reach break-even earlier than expected. XPeng's target price was raised to US$11 from US$9.8.
In response to meager sales of the P5 and G9 YTD, the broker trimmed its revenue forecast on the company for 2024 and 2025 by 7%-9%, and lowered its sales volume forecast for 2024 from 241,000 units to 211,000 units. However, the broker forecast a narrower loss in 2024 to RMB37,000 per car, against previous RMB44,000 per car. This was because the revenue contribution of the technical R&D service provided to Volkswagen and the higher margin of the business.
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