Citigroup: Upgrades XPENG-W (09868) rating to "Buy", with a target price raised to HK$113.00.

Citigroup released a research report stating that due to XPENG-W's strong pace of new vehicle launches and continued investment in artificial intelligence/Siasun Robot&Automation, the bank is adopting a 2.5x 2025 projected price-to-sales (P/S) multiple (1 standard deviation higher than the 2-year average level; previously 1.9x) and raising the target price from 53.30 Hong Kong dollars to 113.00 Hong Kong dollars. Based on strong order growth in 2025/2026, new vehicle launches, improved profitability in 2026, and potential additional growth in the artificial intelligence/Siasun Robot&Automation sector, the rating has been upgraded to "Buy". Citigroup pointed out that XPeng Motors has shown its determination to invest in artificial intelligence/Siasun Robot&Automation, and if it makes significant progress in this area (for example, Horizon Siasun Robot&Automation's current price-to-sales ratio for autonomous driving assistance systems/Siasun Robot&Automation concepts is 6x, expected by 2028), there is a risk of valuation improvement. The bank has raised its sales forecast for 2025/2026 from 260,000 units/330,000 units to 480,000 units/580,000 units: (1) strong order volume in February; (2) the bank expects 2-3 new models of pure electric vehicles (BEV) and extended-range electric vehicles (EREV) to be launched this year, while existing models will also receive updates; (3) the bank expects the P7+ and MONA03 to enter a mature monthly sales growth phase in 2025/2026, with monthly sales of approximately 20,000-24,000 units, leading to strong demand, while demand for Chinese electric vehicle exports will also continue to grow. With the increase in sales volume, the bank has raised its revenue forecast for 2025/2026 from 49.1 billion RMB/59 billion RMB to 79.2 billion RMB/93.3 billion RMB, and raised its vehicle profit margin forecast for 2025/2026 from 11.9%/13.5% to 23.3%/23.2%. Accordingly, the bank has raised its net profit forecast for 2025/2026.