Xpeng Q1 2024 earnings: Deutsche Bank's 1st look

Xpeng's rise to 10.47 today is an indication of where it's heading.

Here are the key takeaways from the research note sent to investors by Deutsche Bank analyst Wang Bin's team.

XPeng delivered 1Q24 earnings upside driven by earlier-than-expected recognition of high-margin VW tech and service revenue; 2Q24 volume outlook also came in better than feared.

Deliveries for 1Q24 were already reported at 21,821 units, leading to revenue of RMB 6.5bn, above DBe/consensus RMB 6.2/6.1bn due to higher ASP (254k vs. 248k) and services & other contribution.

Gross margin increased 670bps QoQ to 12.9%, beating our estimate of 10.1%, driven by stronger service margin of 54% vs. our 35% as the technical R&D service revenue related to VW collaboration kicked in. We estimate this contributed roughly RMB 200m.

Vehicle margin was 5.5%, below our estimates of 6.5%, hurt by inventory provision and losses on purchase commitment related to the P5 (3.2% points headwind).

Opex of RMB 2.7bn was better than our RMB 2.9bn estimate on lower R&D and SG&A.

All together, EPS of (1.49) beat our (2.09).

Management provided a better-than-feared 2Q24 outlook calling for 29,000- 32,000 deliveries (+25-38% YoY), compared to our ~29,000 forecast, translating into RMB 7.5-8.3bn in revenue (+48-64% YoY).

This implies May/June volume increasing at the midpoint to +10,000 units/month on average (vs. 9,393 in April).

On the earnings call, we will look for incremental colour on the volume/margin trajectory, future cadence of VW technology service revenue, and details around MONA.