Citibank: Expects XPENG-W (09868) to report a non-GAAP net loss of 1 billion yuan in the second quarter, and anticipates third quarter deliveries to fall short of expectations.

Citibank released a research report stating that XPENG-W (09868) will announce its second quarter performance, with an expected Non-GAAP net loss of approximately 1 billion yuan for the group and a consolidated gross margin of about 20%, while the automotive gross margin is around 12.5%. The bank maintains its "Buy" rating, with a target price of HKD 87.7 for H shares. Citibank expects XPeng's total deliveries in the third quarter to be around 130,000 units, lower than the market expectation of 150,000 units, mainly due to slightly lower-than-expected deliveries in July, the time required for ramping up L03 production, and the sales of L03 (with a gross margin of over 10%) possibly encroaching on the M03 (with a gross margin in the single digits). The bank also forecasts a slight quarter-on-quarter decline in consolidated gross margin due to a decrease in the share of non-automotive revenue, offsetting the positive impact from the improvement in model mix. Looking ahead to the fourth quarter, Citibank's outlook is more positive. The GX, with a gross margin of around 20%, will gradually improve its mix, and the high-end model G9L (with sales of 5,000 units per month) is set to launch in the fourth quarter, with a gross margin also exceeding 20%. In terms of exports, the proportion of exports in the fourth quarter is expected to rise from about 10% in the third quarter to 20%, with monthly export volume potentially increasing from the current 20,000 units to 40,000 units, significantly aiding earnings visibility. The L05 is set to launch in October this year, with an expected start of exports in the fiscal year 2027.