Citi has released a research report forecasting that XPENG-W (09868) will report a second-quarter Non-GAAP net loss of approximately 1 billion yuan. The firm expects the company's consolidated gross margin to be around 20%, with its automotive gross margin at approximately 12.5%. Citi maintains a "Buy" rating on the stock, with an H-share target price of 87.7 Hong Kong dollars.

Citi anticipates XPENG-W's total deliveries in the third quarter to be around 130,000 units, which is below the market consensus of 150,000 units. This is primarily attributed to July deliveries potentially falling slightly short of expectations, coupled with the time required for the L03 model to ramp up production. Additionally, the L03, which has a gross margin exceeding 10%, may cannibalize sales of the M03, which has a gross margin in the single digits. The bank also expects a slight sequential decline in the consolidated gross margin, as a lower proportion of non-automotive revenue offsets the positive impact from an improved model mix.

Looking ahead to the fourth quarter, Citi holds a more positive outlook. The GX model, with a gross margin of around 20%, is expected to gradually improve the product mix. A higher-end model, the G9L (with monthly sales of 5,000 units), is slated for launch in the fourth quarter and will also carry a gross margin of over 20%. In terms of exports, the export share is projected to increase from approximately 10% in the third quarter to 20% in the fourth quarter. The average monthly export volume could rise from its current level of around 20,000 units to 40,000 units, significantly enhancing earnings visibility. The L05 is scheduled for launch in October this year and is expected to begin exports in fiscal year 2027.