09866 Overview

XPENG-W Earnings Performance: JPMorgan's report indicates that XPENG-W's non-GAAP full-year earnings for FY25 exceeded expectations by 50-70%, marking a significant achievement with quarterly profitability reached for the first time in 4Q25.

Factors Contributing to Success: The company's improved performance is attributed to increased car sales, an optimized product mix, and contributions from non-automotive sectors like after-sales services and automotive finance.

Market Outlook: JPMorgan views XPENG-W and NIO-SW as key recovery trades in the Chinese automotive market, suggesting they are attractive investment opportunities for 2026 due to strong technology deployment and growth potential.

Stock Rating and Target Price: JPMorgan maintains an Overweight rating on XPENG-W, setting a target price of HKD135, while noting that the stock price is likely to be re-rated positively in the future.

JPMorgan's Predictions: JPMorgan's research report forecasts that GEELY AUTO and SINOTRUK will exceed market expectations this year, despite challenges from rising demand and input costs.

Potential Upside for NIO and XPENG: NIO and XPENG are expected to show significant growth potential in the second half of 2026, driven by specific factors unique to each company.

Market Rebound for BYD and Leapmotor: BYD and Leapmotor are anticipated to recover gradually after their March earnings announcements, as the market has adjusted to more realistic earnings forecasts.

Overall Industry Outlook: The Chinese auto industry is projected to rebound in the second quarter of 2026, with a 30% increase in passenger vehicle demand, aided by improved customer traffic ahead of the Beijing Auto Show.

Strong Financial Performance: NIO-SW reported a significant increase in revenue for Q4 2025, reaching RMB35 billion, a 76% year-over-year and 59% quarter-over-quarter growth, with a non-GAAP net profit of RMB728 million.

Annual Growth Overview: For the entire year of 2025, NIO-SW's revenue grew by 33% year-over-year to RMB87 billion, while the non-GAAP net loss decreased by 39% year-over-year to RMB12 billion.

Market Sentiment: Despite a short selling ratio of 30.18% and significant short selling activity amounting to $270.28 million, analysts remain optimistic about NIO-SW's stock, rating it as a Buy based on strong model cycles and cost-saving measures.

Industry Context: UBS highlighted that companies like BYD, CATL, and Li Auto present good risk-reward opportunities, especially as oil price volatility enhances the attractiveness of electric vehicle ownership costs.

Revenue Growth: NIO-SW's 4Q25 revenue increased by 59% QoQ to RMB34.65 billion, driven by higher delivery volumes and the success of the high-end NIO ES8 model, with revenue per vehicle rising to approximately RMB253,000.

Profitability Achievement: The company achieved positive quarterly profit for the first time, attributed to improved gross profit margins, optimized product structure, and a significant decrease in expense ratios.

Future Product Plans: NIO-SW plans to launch several new models in 2026, including the flagship SUV NIO ES9 and upgrades to existing models, aiming to enhance its product lineup and competitiveness in the high-end SUV market.

Market Outlook: With an expected increase in the proportion of high-end models and ongoing product structure optimization, NIO-SW is positioned to improve profitability and offset cost pressures in the future.

Financial Performance: NIO-SW reported a 76% YoY revenue growth in 4Q25, reaching RMB34.7 billion, with a gross profit margin increase to 17.5% and a non-GAAP operating profit of RMB1.25 billion, surpassing previous forecasts.

Challenges Ahead: Despite the positive quarterly results, CMBI highlighted ongoing challenges for 2026, including market competition and component price fluctuations, which may impact NIO's sustainability of low R&D and SG&A expenses.

Profitability Focus: The company's management prioritized achieving profitability in 4Q25, resulting in its first quarterly net profit of RMB122 million, but this focus may not be sustainable moving forward.

Stock Ratings Update: CMBI maintained a Hold rating for NIO-SW and adjusted target prices for its H-shares and US stock from $50 and US$6.4 to $47 and US$6, respectively.

Cost Increase for NIO Vehicles: William Li, founder of NIO, announced that rising prices of storage memory and raw materials have increased the cost of premium new energy vehicles by RMB3,000-5,000 each, totaling nearly RMB10,000.

Current Pricing Strategy: Despite the increased costs, Li stated that NIO's current system can absorb this pressure, and the company has no plans to adjust vehicle prices at this time.