On Wednesday, Bernstein SocGen Group maintained its Market Perform rating and a steady stock target of $9.00 on shares of XPeng (NYSE:XPEV), an electric vehicle manufacturer. The company's second-quarter financial results showcased significant year-over-year revenue growth and an impressive gross margin improvement, attributed to increased vehicle deliveries and higher average selling prices (ASP).
XPeng's revenue for the second quarter reached RMB 8.1 billion, marking an increase of 60.2% from the same period last year and 23.9% from the previous quarter. This growth was fueled by a substantial rise in vehicle deliveries, which totaled 30,200 units, up 30.2% year-over-year and 38.4% quarter-over-quarter. The ASP for the vehicles also went up by 18.4% compared to last year, although it saw a decrease of 11.2% from the first quarter of 2024.
The gross margin for the quarter was reported at 14.0%, a significant recovery from the negative margin of -3.9% in the second quarter of 2023 and an improvement over the 12.9% margin in the first quarter of 2024.
The vehicle margin specifically increased to 6.4%, up from -8.6% in the same quarter of the previous year and 5.5% in the first quarter of 2024. However, when compared sequentially to an adjusted vehicle margin of 8.7% in the first quarter, the second-quarter vehicle margin was lower, mainly due to a reduced contribution from the X9 model.
A notable contributor to XPeng's margin improvement was the technology research and development services fees received from Volkswagen (ETR:VOWG_p). The licensing fees from Volkswagen are estimated to have exceeded approximately RMB 400 million and came with an extremely high gross margin of over 90%, bolstering XPeng's overall margin trajectory. Bernstein anticipates that Volkswagen's contribution to XPeng's margins will continue to grow in the coming quarters.
In other recent news, Chinese electric vehicle manufacturer XPeng Inc (NYSE:XPEV). reported a 30% year-over-year increase in vehicle deliveries for the second quarter of 2024, totaling 30,207 units. The company also saw a gross margin improvement to 14%, reflecting its leading position among Chinese EV makers. Total revenues for the quarter reached RMB8.11 billion, marking a 60.2% year-over-year increase.
XPeng has announced plans to launch new products and expand its international presence, focusing on right-hand drive markets and doubling its overseas sales stores. The company is also in strategic cooperation with Volkswagen for the development of an E/E architecture, and is expected to enter markets such as the UK, Australia, and Southeast Asia in the second half of 2024.
Despite facing challenges in securing a solid bottom limit of ADAS capability, the company remains bullish on its prospects, with stable gross margins anticipated in the second half of 2024, supported by increased exports and volume sales. The company's Pure Vision technology is expected to enhance ADAS capability and reduce costs.
These are recent developments that further position XPeng as a noteworthy player in the global EV landscape. The company's focus on technological advancements, strategic partnerships, and international expansion are key aspects for investors to monitor as XPeng continues to navigate the dynamic automotive industry.
InvestingPro Insights
As XPeng (NYSE:XPEV) continues to navigate the competitive electric vehicle market, InvestingPro data highlights some key financial metrics that may interest investors. The company's market capitalization stands at $6.41 billion, reflecting its position in the industry.
Despite the revenue growth reported in the second quarter, XPeng's profitability remains a concern, with a negative P/E ratio of -4.9, indicating that the company is not currently generating profits relative to its share price. Furthermore, the gross profit margin for the last twelve months as of Q1 2024 is relatively low at 3.95%, underscoring the challenges XPeng faces in terms of cost management and pricing strategies.
InvestingPro Tips suggest that while XPeng holds more cash than debt on its balance sheet, which is a positive sign of financial health, analysts do not anticipate the company will be profitable this year. Moreover, the stock price has been quite volatile, currently trading near its 52-week low, which may present a risk or an opportunity for investors depending on their investment strategy.
For those considering XPeng as an investment, there are over 12 additional InvestingPro Tips available, offering detailed analysis and insights into the company's financials and market performance.
Investors may also find the InvestingPro Fair Value estimate of $9.44 USD to be of interest, especially when compared to the current price and analyst targets. This valuation is based on comprehensive financial analysis and may serve as a benchmark for investors assessing the potential value of XPeng's shares.
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