Analysts at Morgan Stanley have issued a research report reiterating their 'Overweight' rating on XPENG-W (09868) with a target price of HK$96.

The report highlights the imminent global launch of the company's new model, the MONA L03. Its competitive pricing strategy in the Chinese market is expected to drive sales volume, while its simultaneous launch in the European market is anticipated to enhance the overall product mix's profitability.

Should the supply chain successfully ramp up production capacity, the bank projects the model could achieve monthly sales exceeding 15,000 units. Furthermore, the company's AI business is seen as offering additional potential for valuation upside.

Morgan Stanley notes that the pure electric version of the MONA L03 is priced between RMB 123,800 and RMB 156,800 in China, with the plug-in hybrid version priced between RMB 123,800 and RMB 146,800, both below pre-sale prices. The model is also launching in Europe, with the pure electric and extended-range electric versions priced at approximately €35,600 and €38,600 respectively, equivalent to roughly RMB 276,000 to RMB 299,000.

The firm argues that focusing solely on the average selling price and gross margin in China misses the key point, as overseas prices are more than double the domestic ones. An increasing proportion of overseas sales is expected to make a positive contribution to the group's profit margins.

According to the report, XPeng's near-term prospects depend not only on sales volume but significantly on its product mix, given that the European market offers higher average selling prices and margins.

Morgan Stanley expects the successful launch of the MONA L03, along with subsequent models like the G9L and L05, to stabilize the core automotive business. Meanwhile, non-automotive initiatives are projected to drive a valuation re-rating in the third quarter.