With the increasing demand for low emission cars and favorable government policies, the global electric vehicle (EV) industry is estimated to grow at a CAGR of 22.6% between 2020 and 2027, reaching $802.81 billion in the terminal year.
China continues to dominate in the global production and sale of EVs. In November, China set a new all-time monthly sales record for plug-in electric cars, exceeding the 400,000 thresholds. More precisely, 413,094 new passenger plug-in cars were sold in November, representing a 106% year-over-year growth. In addition, the market share for plug-in vehicles soared to 19%.
Given this backdrop, today I’ll analyze and compare two Chinese EV stocks: XPeng Inc. (XPEV) and Kandi Technologies Group, Inc. (KNDI). Founded in 2015, Xpeng develops and sells electric SUVs and four-door sports sedans. Kandi Technologies manufactures and sells EVs, as well as EV products and parts in China and across the globe. Over the past month, shares of XPeng slid almost 2%, while KNDI declined 11%.
On January 1st, XPeng reported delivery numbers for December and Q4. Despite the global supply chain disruptions, the company delivered 16,000 Smart EVs in December, which is a 181% year-over-year increase. These numbers reflect XPeng’s solid business momentum and execution capability. In Q4, total deliveries hit 41,751, up 222% year-over-year. With 21,342 deliveries, the P7 smart sports sedan was the most demanded model.
On December 6th, Kandi Technologies announced a share buyback program of up to $20 million. The plan is expected to be completed by the end of 2022. The company’s CEO Hu Xiaoming said, “We believe that this repurchase program ‘puts our money where our mouth is’ demonstrating confidence in our liquidity and business potential, and believe that our shareholders will agree.”
Recent Financial Performance & Analysts Estimates
On November 23rd, XPeng posted its third-quarter earnings report. In Q3, XPeng revenue increased 187.4% year-over-year to $887.7 million, driven by higher revenues from vehicle sales. Moreover, the company was able to beat Wall Street consensus estimates by $67.82 million. Besides, XPEV reported a Non-GAAP EPADS of ($0.27), topping Wall Street projections by $0.06.
It is important to note that the company significantly improved its gross margin from 4.6% as of 3Q2020 to 14.4%. Also, XPeng’s vehicle margin was improved by 260 bps to 13.6% on a quarter-over-quarter basis. Its quarterly vehicle deliveries stood at 25,666, demonstrating a 199.2% year-over-year improvement.
A ($0.07) consensus EPS estimate for the fourth quarter, ending December 31st, 2021, represents a 58.89% increase year-over-year. Its revenue for the next quarter is expected to increase 140.49% year-over-year to $1.05 billion.
For its fiscal third quarter ended September 30th, 2021, Kandi’s total revenue decreased 10.3% year-over-year to $16.8 million. In addition, the company significantly missed analysts’ revenue estimates by $22 million. The decrease in revenue was primarily driven by a 62.5% shrink in revenue from the sales of EV parts, which stood at $3.17 million. On the other hand, its electric scooters, electric self-balancing scooters, and associated parts sales came in at $6.28 million compared to $0.91 million in the year-ago quarter. KNDI’s GAAP EPS stood at ($0.10), missing consensus by $0.29.
The company’s gross margin has been reported at 16.4% compared to 20.9% in Q3 2020.
Analysts expect KNDI’s EPS to improve 67.01% year-over-year in the fourth quarter to ($0.07). Besides, the $32.82 million consensus revenue estimate for the fourth quarter represents a 1.31% rise year-over-year.
Comparing Options Market Sentiment
Looking at the January 21st, 2022 option chain for both XPEV and KNDI, we can define options market sentiment by analyzing the open interest levels. In XPEV’s case, the open calls/open puts ratio at the $47.00 strike price comes in at 2.43x, showing a bullish options market sentiment. When it comes to KNDI, the open calls/open puts ratio at the $4.00 strike price stands at 0.94x, demonstrating a neutral market sentiment.
The Bottom Line
In my opinion, XPEV is currently a better long-term buy. The company’s delivery figures for December and Q4 look strong, despite ongoing supply chain problems. Furthermore, XPEV’s financials and forward growth rates are substantially better. Finally, XPEV has superior options market sentiment at the moment.
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XPEV shares fell $46.11 (-100.00%) in premarket trading Thursday. Year-to-date, XPEV has declined -8.64%, versus a -1.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...
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