External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Both Xpeng’s revenue and net loss in 4Q22 missed our prior forecasts, largely due to more intensified competition than expected.</li><li>On the other hand, we expect its sales volume to rise sequentially every quarter in FY23E, based on our channel checks with its battery supplier and the rollouts of the G6 in 2Q23.</li><li>It appears to us that the automaker has started to prioritize cost optimization and customer needs after senior management changes. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Both Xpeng’s revenue and net loss in 4Q22 missed our prior forecasts, largely due to more intensified competition than expected.On the other hand, we expect its sales volume to rise sequentially every quarter in FY23E, based on our channel checks with its battery supplier and the rollouts of the G6 in 2Q23.It appears to us that the automaker has started to prioritize cost optimization and customer needs after senior management changes. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xpeng Inc. (XPEV US) – 4Q22 earnings miss; sales may rise QoQ in FY23E

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>WTR Sustainable Index: During the week ended March 17, 2023, the WTR Sustainable Index underperformed the broader market, rising 1.2% W/W versus the S&amp;P 500 Index (up 1.4%), the Russell 2000 Index (down 2.6%), and the Nasdaq Composite Index (up 4.4%).</li><li>Advanced Transportation Solutions (69.3% of the index) drove the index performance, rising 3.3%, while Industrial Climate and Ag Technology (22.8% of the index) was down 2.0% and Energy Technology was down 5.8%.</li><li>Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 23.6x versus 17.6x for the S&amp;P 500.</li></ul>

WTR Sustainable Index: During the week ended March 17, 2023, the WTR Sustainable Index underperformed the broader market, rising 1.2% W/W versus the S&amp;P 500 Index (up 1.4%), the Russell 2000 Index (down 2.6%), and the Nasdaq Composite Index (up 4.4%).Advanced Transportation Solutions (69.3% of the index) drove the index performance, rising 3.3%, while Industrial Climate and Ag Technology (22.8% of the index) was down 2.0% and Energy Technology was down 5.8%.Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 23.6x versus 17.6x for the S&amp;P 500.

Weekly Sustainable Investing Surveyor: Week Ended March 17, 2023

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>Xpeng reported soft 4Q22 results, with top line of RMB 5.14bn, missing our estimate/cons. by (5.6%)/(9.7%); GPM of 8.7%, missing our estimate/cons. by (1.6ppt)/(3.4ppt), primarily due to increased sales promotions. </li>
<li>We maintain SELL, because 1) price war and intensified competition in 2023 are still key challenges facing its existing and new models; </li>
<li>2) margin pressure ahead amid the price war, while its cost reduction initiatives starting from 2H23 take time to verify effect.</li>
</ul>


Xpeng reported soft 4Q22 results, with top line of RMB 5.14bn, missing our estimate/cons. by (5.6%)/(9.7%); GPM of 8.7%, missing our estimate/cons. by (1.6ppt)/(3.4ppt), primarily due to increased sales promotions. 
We maintain SELL, because 1) price war and intensified competition in 2023 are still key challenges facing its existing and new models; 
2) margin pressure ahead amid the price war, while its cost reduction initiatives starting from 2H23 take time to verify effect.


[XPeng (XPEV US) Earnings Review]: Facing Price War and Fiercer Competition in 2023

<ul>
<li>Even though we are long-term optimistic on the rise of Chinese consumer brands, we believe short-term optimism is misplaced. </li>
<li>Two themes: (1) structural changes led by China’s transition to an older and more affluent society, (2) substitution and globalization that can break the ceiling for valuation;</li>
<li>Our TOP PICKS are Li Auto, Atour, Luckin, FUTU, BEKE and Miniso</li>
</ul>


Even though we are long-term optimistic on the rise of Chinese consumer brands, we believe short-term optimism is misplaced. 
Two themes: (1) structural changes led by China’s transition to an older and more affluent society, (2) substitution and globalization that can break the ceiling for valuation;
Our TOP PICKS are Li Auto, Atour, Luckin, FUTU, BEKE and Miniso


[Consumer Brands Deep Dive]:Structural and Substitution Drive Chinese Consumer

China Specialist, Auto and Industrial Specialist

Victoria Li

<ul>
<li>25% reduction on hardware cost of car production in one year would be remarkable if achieved</li>
<li>Integrating two sales systems into one is a positive move, but not good enough in our view.</li>
<li>Mr. He taking direct resposibility of styling design division is a sign that the company acknowledges that it is a key improvement area for estabilishing brand image</li>
</ul>


25% reduction on hardware cost of car production in one year would be remarkable if achieved
Integrating two sales systems into one is a positive move, but not good enough in our view.
Mr. He taking direct resposibility of styling design division is a sign that the company acknowledges that it is a key improvement area for estabilishing brand image


Xpeng - Bold Intentions on Costs and Sales System Provide Some Silver Linings

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 (XPEV US)

Xpeng Inc. (XPEV US) – 4Q22 earnings miss; sales may rise QoQ in FY23E

Both Xpeng’s revenue and net loss in 4Q22 missed our prior forecasts, largely due to more intensified competition than expected.

CMB International

Weekly Sustainable Investing Surveyor: Week Ended March 17, 2023

Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 23.6x versus 17.6x for the S&P 500.

Water Tower Research

[XPeng (XPEV US) Earnings Review]: Facing Price War and Fiercer Competition in 2023

We maintain SELL, because 1) price war and intensified competition in 2023; 2) margin pressure ahead amid the price war.

Blue Lotus Research Institute

[Consumer Brands Deep Dive]:Structural and Substitution Drive Chinese Consumer

Chinese underconsumption is only half true. It only occurs in categories associated with development stages; Our TOP PICKS are Li Auto, Atour,...

Blue Lotus Research Institute

Xpeng - Bold Intentions on Costs and Sales System Provide Some Silver Linings

25% reduction on hardware cost of car production in one year would be remarkable if achieved. Integrating two sales systems into one is a positive...

Victoria Li

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