Xpeng (NYSE: XPEV) Stock Is Currently Severely Overvalued Relative To Its Larger Peer NIO (NYSE: NIO)

Xpeng (NYSE: XPEV) Stock Is Currently Severely Overvalued Relative To Its Larger Peer NIO (NYSE: NIO)

Xpeng Motors (NYSE:XPEV), a Chinese EV manufacturer that also goes past the name Xiaopeng Motors, has largely flown under the radar of investors always since the stock debuted on the New York Stock Exchange back in August 2020. However, the recent rally in Xpeng shares has get an impetus for wider recognition, marking the stock as an attractive alternative to its much larger analogue, NIO (NYSE:NIO). In this mail service, nosotros will try to explicate why an entry at electric current price levels is very risky.

Behave in mind that investors accept been betting on meteoric growth in Prc's EV sector in the years to come. Information technology is for this reason that NIO and other major Chinese EV players – including Xpeng and Kandi – have been performing so well in the stock market. The following infographic illustrates this phenomenon in detail:

Source

As a refresher, Xpeng currently retails two EV models – the G3 SUV and the P7 sedan. The G3 offers a maximum range of 520 km, a fast DC charging fourth dimension of 30 minutes to recharge the bombardment from 30 percentage to fourscore per centum level, 0 – 100 km/h acceleration in 8.vi seconds, and a maximum speed of 170 km/h. For its office, the P7 offers a maximum range of 706 km (with an extra range pack), a charging time of 670 km, a fast DC charging time of 31 minutes to recharge the battery from xxx percent to 80 percent level, and a maximum speed of 170 km/h. Readers can view the detailed specs of each car here and here. The G3 starts retailing at 146,800 Yuan ($22,200), while the P7 tin be purchased past customers at a minimum toll of 229,900 Yuan ($35,000).

Xpeng'due south current production levels are certainly pocket-sized when compared with NIO's. As an illustration, Xpeng is expected to produce only 22,000 units in 2020. NIO, on the other paw, has already delivered 31,430 EVs, equally of October 2020. Nonetheless, Xpeng is working to ramp up its product significantly. As per a recent investment annotation past Credit Suisse's Bin Wang, the company will produce 60,000 units in 2021 and 135,000 units in 2022:

"Due to relatively smaller book initially, nosotros assume XPeng will stay loss-making in 2020-22E with negative free greenbacks flow—Rmb8.iii bn total negative FCF in these three years."

The analyst then went on to notation:

"Starting at a volume of 22k units in 2020, we forecast XPeng will deliver 60k/135k units in 2021/2022. We estimate XPeng's total per unit cost (COGS+SG&A+R&D) to reduce from Rmb372k in 2020 to RMB209k in 2023, when the company achieves 210k unit volume and first year positive lesser line and free cash flow."

For comparison, NIO is working to increase its almanac production capacity to 300,000 units past the end of 2021. Moreover, NIO is also looking to expand into central geographical regions, with Europe standing at the pinnacle of the listing of possible contenders. Xpeng, for the time being, is focused merely on the Chinese market place. Patently, in light of these facts, NIO appears to be a much more than attractive investment.

Allow's now have a expect at the two stocks from a fundamental analysis bespeak of view. NIO has registered year-to-date gains of over i,000 percentage! Xpeng though has generated gains of around 84 pct relative to its current low of $17.11 per share. Despite these relatively pocket-sized gains, Xpeng's fundamentals appear much more stretched compared with its larger peer. The chart below, sourced from Koyfin, illustrates the abaft 12-calendar month Price-to-Sales(P/S) ratio for the two companies. Information technology should be noted though that this data is express for Xpeng every bit it went public only in Baronial.

Every bit is evident from the nautical chart above, Xpeng is currently trading at a P/Due south ratio that is almost double that of NIO. A comparative analysis of the Enterprise Value-to-Sales metric also yields a similar movie.

Using next 12-month (NTM) timeframe also yields a similar result:

Of course, the purpose of this article is non to discourage investment in Xpeng. For all intents and purposes, the stock remains a promising EV play. In fact, just today, Bank of America (NYSE:BAC) published a bullish outlook for Xpeng, raising the stock price target to $36.20 while noting:

"We raise our 2022E book sales by v% mainly to reflect stronger confidence in XPeng'southward continuous model launch and volume growth in 2022. We believe its attempt in improving electrical vehicle functioning and enhancing user feel on connectivity and as well autonomous driving on the Xmart OS and XPILOT should assistance improve its brand image."

Our purpose here is to highlight the current lofty valuation of the stock. Investors may be able to generate a meliorate return on their investment if they wait for a substantial dip before jumping headlong into this stock play.

Disclaimer:

The writer does not have any exposure to NIO or Xpeng

Source: https://wccftech.com/xpeng-nyse-xpev-stock-is-currently-severely-overvalued-relative-to-its-larger-peer-nio-nyse-nio/

Posted by: bennettoffiesill.blogspot.com

Share this post