China Specialist, Auto and Industrial Specialist

Victoria Li

Equity Bottom-Up

Based on medias' non-stop recorded test drives on Xpeng P5 with NGP for City scenarios, we believe customers would be excited on what city NGP could do. Besides handling complicated scenarios without overtaking, city NGP actually achieved point-to-point intelligent driving in this test drive from where it parked to the underground parking of destination. City NGP for first batches of cities will be released in 1H2022.
Also, management announced Xpilot 4.0 (full-scenario Xpilot) will be first installed in new SUV model launching in 2022E and will be officially released in 1H2023. Xpilot 5.0 (full-redundancy software and hardware architecture) will be installed in another new model whose frame design is completed now.
To remove customers' range anxiety, Xpeng would provide first mass-production 800V high-voltage SiC platform, which could provide 200km range with 5 minutes charging. With in-house developed charging power storage technology, X-Power supercharger station would be able to charge 30 cars at a time. Xpeng started building charging stations on highways this year to cover long journey travellers. 
With foldable rotor mechanism for seamless fly-drive conversion, Xpeng targets to start mass production of flying cars in 2024E with sales price no more than Rmb1mn.  
Reiterate BUY.

Based on medias' non-stop recorded test drives on Xpeng P5 with NGP for City scenarios, we believe customers would be excited on what city NGP could do. Besides handling complicated scenarios without overtaking, city NGP actually achieved point-to-point intelligent driving in this test drive from where it parked to the underground parking of destination. City NGP for first batches of cities will be released in 1H2022.
Also, management announced Xpilot 4.0 (full-scenario Xpilot) will be first installed in new SUV model launching in 2022E and will be officially released in 1H2023. Xpilot 5.0 (full-redundancy software and hardware architecture) will be installed in another new model whose frame design is completed now.
To remove customers' range anxiety, Xpeng would provide first mass-production 800V high-voltage SiC platform, which could provide 200km range with 5 minutes charging. With in-house developed charging power storage technology, X-Power supercharger station would be able to charge 30 cars at a time. Xpeng started building charging stations on highways this year to cover long journey travellers. 
With foldable rotor mechanism for seamless fly-drive conversion, Xpeng targets to start mass production of flying cars in 2024E with sales price no more than Rmb1mn.  
Reiterate BUY.

Xpeng: Full-Scenarios NGP on the Way, Flying Vehicle Countdown

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In this weeks recap, we look at:<ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul>There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>.

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

Once unveiled, Xpeng's price details of its well anticipated P5 model got some pushbacks from the market. 1) Prices are higher than expected, especially model 550E and 550P. 2) City NGP might not be available in years, which leads to question on necessity of buying NGP or even Xpeng P5. 3) G3 platform based design raises concern on car driving quality/controllability.In our view, P5 is more attractive than either A-class ICE models or EV competitor models (please see the details in our note). City NGP would be available for test drive in Oct and released in Jan-2022. And management claimed P5 would provide better driving experience although it's based on G3 platform, which would be verified by test drive soon.Reiterate BUY.

Once unveiled, Xpeng's price details of its well anticipated P5 model got some pushbacks from the market. 1) Prices are higher than expected, especially model 550E and 550P. 2) City NGP might not be available in years, which leads to question on necessity of buying NGP or even Xpeng P5. 3) G3 platform based design raises concern on car driving quality/controllability.In our view, P5 is more attractive than either A-class ICE models or EV competitor models (please see the details in our note). City NGP would be available for test drive in Oct and released in Jan-2022. And management claimed P5 would provide better driving experience although it's based on G3 platform, which would be verified by test drive soon.Reiterate BUY.

Orient Overseas International / Event-Driven

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect <a href="https://www.smartkarma.com/entities/brii-biosciences" target="_blank" data-smartkarma-citation="entities:33014:1" rel="noopener">Brii Biosciences (2137 HK)</a>, <a href="https://www.smartkarma.com/entities/helen-s-international-holdings" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holdings (9869 HK)</a>, <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>, <a href="https://www.smartkarma.com/entities/keymed-biosciences-inc" target="_blank" data-smartkarma-citation="entities:33011:1" rel="noopener">Keymed Biosciences Inc (2162 HK)</a> and <a href="https://www.smartkarma.com/entities/sce-intelligent-commercial-management" target="_blank" data-smartkarma-citation="entities:33500:1" rel="noopener">SCE Intelligent Commercial Management (606 HK)</a> to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.<div>Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.</div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect Brii Biosciences (2137 HK), Helen's International Holdings (9869 HK), Medlive Technology (2192 HK), Keymed Biosciences Inc (2162 HK) and SCE Intelligent Commercial Management (606 HK) to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that are listed by the review cut-off date are eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a>.Along with the announcement of the changes at the September rebalance, the index universe was expanded to cover a new theme - 'Autonomous' and examples include self-driving, autonomous robots, internet of things, smart lifestyle etc.The expansion to the universe could see <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> added to the index while <a href="https://www.smartkarma.com/entities/weimob-inc" target="_blank" data-smartkarma-citation="entities:27394:1" rel="noopener">Weimob Inc. (2013 HK)</a> could be deleted from the index.<a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> and <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> fail the velocity test for tradable indices and should not be included in the index.Estimated one-way turnover is 9.23% and will result in a one-way turnover of HK$3.65bn. There will be a lot of selling on the smaller index constituents due to the funding trade.

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the December 2021 review of the Hang Seng Family of Indexes on 12 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ends on 30 September and stocks that are listed by the review cut-off date are eligible for inclusion in the Hang Seng Tech Index (HSTECH INDEX).Along with the announcement of the changes at the September rebalance, the index universe was expanded to cover a new theme - 'Autonomous' and examples include self-driving, autonomous robots, internet of things, smart lifestyle etc.The expansion to the universe could see BYD (1211 HK) added to the index while Weimob Inc. (2013 HK) could be deleted from the index.XPeng (9868 HK) and Li Auto (2015 HK) fail the velocity test for tradable indices and should not be included in the index.Estimated one-way turnover is 9.23% and will result in a one-way turnover of HK$3.65bn. There will be a lot of selling on the smaller index constituents due to the funding trade.

Hang Seng TECH Index Rebalance Preview: Autonomous Driving Change

China

XPeng Inc. designs, produces, and distributes electric vehicles. The Company designs, develops, manufactures and markets smart smart electric vehicles, as well as finance, parts, and maintenance services. XPeng serves customers in China.

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XPeng (9868 HK)

Xpeng: Full-Scenarios NGP on the Way, Flying Vehicle Countdown

Based on medias' non-stop recorded test drives on Xpeng P5 with NGP for City scenarios, we believe customers would be excited on what city NGP...

Victoria Li

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

Xpeng: P5 Is Too Expensive?

Once unveiled, Xpeng's well anticipated P5 model got some pushbacks from the market. 1) Prices are higher than expected, especially model 550E and...

Victoria Li

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

There could be 5 adds to the HSCI in December. In March, there could be 17 adds and 4 deletes. There will be pre-positioning on the inclusions...

Brian Freitas

Hang Seng TECH Index Rebalance Preview: Autonomous Driving Change

Following the addition of the 'Autonomous' theme, BYD could be added to the HSTECH Index replacing Weimob. There will be a large impact of the...

Brian Freitas

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