BOC International: Maintaining Xiaopeng Group-W (09868) “Buy” Rating and Lowering Target Price to HK$76.7

The Zhitong Finance App learned that BOC International released a research report to maintain the Xiaopeng Group-W (09868) “buy” rating, but considering that the 3Q26 growth fell below previous expectations and the pace of profit cashing back, the bank lowered its target price to HK$76.7 to reflect the reduction in the 2026 revenue forecast, and the target valuation dropped 1.5 times the 2026 market sales rate. The bank lowered its 2026-28 sales forecast from 51.8/649/728,000 units to 455/55.5/655,000 units, and the revenue forecast to 907/113.4/135.4 billion yuan. The company's 3Q26 revenue guide is 21.7 to 23.4 billion yuan, which is about 15% lower than the market's consensus forecast. The automobile business profit inflection point is likely to move to 4Q26.

The main views of BOC International are as follows:

Total gross margin remained resilient in 2Q26, and the improvement in automobile profits was weaker than the overall gross margin performance

2Q26 revenue was 19.74 billion yuan (RMB, same below), +8.0% year over year, +51.5% month on month; 103,300 vehicles were delivered, with an implied ASP of about 165,000 yuan based on automobile sales revenue, -5.9% month-on-month and +0.9% year-on-year. The total gross profit margin was 20.7%, +3.4 percentage points year on year, but automobile gross margin was only 12.1%, -2.2 percentage points year over year, the same month on month. High margin technology R&D services clearly supported the overall gross margin. R&D/sales management expenses were $29.1/250 billion respectively, +32.1%/15.2% year-on-year. Of these, sales management expenses increased 32.5% month-on-month, mainly due to increased commission and marketing investment from franchisees; 2Q26 net loss was 1.34 billion yuan, which was higher than the bank's expectations.

The 3Q26 guidance fell short of expectations, the profit inflection point moved to 4Q26, and physical AI commercial verification began

The company's 3Q26 revenue guide was RMB 21.7 to RMB 23.4 billion, with a median value of RMB 22.55 billion, which is about 15% lower than the market's consensus forecast. The growth in 4Q26 is mainly dependent on overseas deliveries of the G9L, 4Q MONA L05 and L03 in September; management aims to deliver more than 60,000 vehicles in a single month in 4Q26 and more than 40,000 vehicles in the overseas quarter. At the same time, the robotics business has just completed financing of more than 900 million US dollars, with a post-investment valuation of more than 6.3 billion US dollars. IDG led the investment, Gao Rong participated, and received strategic investment from Tencent and Ali; IRON plans large-scale mass production by the end of 2026 and external delivery in 2027. Robotaxi has completed more than 2,000 closed test orders in Guangzhou, with the goal of carrying passengers without safety personnel in 2027.

Risk Alerts

Deliveries and new models in the second half of the year fell short of expectations; price competition intensified; overseas deliveries fell short of expectations; commercialization of the physical AI business was slower than expected.