According to a recent report by CMB International, Xpeng Motors (XPEV, Financial) has seen success with its newly launched models, Mona M03 and Xpeng P7+. These models are attractively priced and well-positioned in the market, which has led to an increased sales forecast for the upcoming year. The company now expects a 26% rise in sales, reaching 390,000 units, with new models anticipated to contribute 75% of the sales.
The anticipation of increased sales, combined with improved gross margins, suggests that Xpeng is on the path to profitability. The company is projected to achieve profitability by 2026. Currently, the forecast for the fourth quarter of this year shows a net loss of approximately 1.6 billion RMB. However, the annual net loss is expected to narrow from around 6.02 billion RMB this year to 2.26 billion RMB next year.
CMB International has upgraded Xpeng's rating from "Hold" to "Buy" and raised the target price for its U.S. shares from $8 to $16. This valuation is based on a projected 1.5x price-to-sales ratio for next year, which is deemed reasonable given the expectation of achieving breakeven by 2026. The company is forecasted to reach sales of about 490,000 units with a gross margin of 15.3% by 2026, leading to an estimated net profit of 103 million RMB.
