With the increasing number of companies entering the electric vehicle (EV) manufacturing space, expanding charging infrastructure, and supportive government policies, China is the world’s largest EV producer and market. While the country’s auto sales plunged in March due to an extended COVID-19 lockdown, plug-in electric car sales more than doubled in the month. Furthermore, the share of plug-in vehicles hit 26% of the total market share in China.
China’s rising environmental concerns and the country’s resolve to reduce emissions from vehicles are expected to help it electrify the industry completely by 2025. The Chinese EV market is expected to grow at a 30.1% CAGR to reach $799 by 2027.
Given the favorable industry trends, Wall Street analysts expect fundamentally sound Chinese EV stocks XPeng Inc. (XPEV), Li Auto Inc. (LI), and Kandi Technologies Group, Inc. (KNDI) to more than double in price in the coming months.
XPeng Inc. (XPEV)
Headquartered in Guangzhou, China; XPEV designs, develops, manufactures, and markets smart electric vehicles; and provides sales contracts, maintenance, vehicle leasing, insurance agency, automotive loan referral and auto financing, and other services.
On April 27, 2022, XPEV announced a strategic cooperation agreement with the Agricultural Bank of China, Guangdong Branch, to secure RMB7.5 billion in credit facilities. These credit facilities are expected to help the company expand its business operations and provide a compelling EV experience to customers.
On March 14, 2022, XPEV announced that it had joined three major European automobile associations, the European Association for Electromobility (AVERE), Royal RAI Vereniging/RAI Association (RAI), and BIL Sweden, to accelerate the development of electrification, digitization, and automation technologies for the automobile industry. This should help the company bring valuable insights into the smart EV sector and develop a sustainable and greener mobility ecosystem.
XPEV’s total revenue increased 200.1% from the prior-year quarter to RMB8.56 billion ($1.28 billion) in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit for the quarter came in at RMB1.02 billion ($0.15 billion), reflecting a 386% year-over-year increase.
Analysts expect XPEV’s revenue for its fiscal quarter ended March 31, 2022, to be $1.17 billion, indicating an increase of 155% year-over-year. Also, the company’s revenue is expected to grow 95% year-over-year to $6.42 billion in the current fiscal year. It has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
XPEV’s stock has slumped 23% in price over the past month to close the last trading session at $22.28.
Among the 10 Wall Street analysts that have rated XPEV, nine rated it Buy, and one rated it Hold. The 12-month median price target of $45.16 indicates a 102.7% potential upside. The price targets range from a low of $34.00 to a high of $67.00.
Li Auto Inc. (LI)
Based in Beijing, LI designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China.
LI’s total revenues increased 156.1% year-over-year to RMB10.62 billion ($1.59 billion) in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit grew 228.5% from the year-ago value to RMB2.38 billion ($0.36 billion), while its income from operations improved 130.5% year-over-year to RMB24.10 million ($3.61 billion). Its net EPS increased 150% from its year-ago value to $0.06.
The $0.32 consensus EPS estimate for its fiscal year ending Dec. 31, 2023, represents a 383.3% improvement year-over-year. The $13.40 billion consensus revenue estimate for the same quarter represents a 71.1% increase from the same period last year.
The stock has gained 16.3% in price over the past year to close the last trading session at $20.92.
All six Wall Street analysts that have rated LI rated it Buy. The 12-month median price target of $41.87 indicates a potential upside of 100.1%. The price targets range from a low of $37.20 to a high of $52.00.
Kandi Technologies Group, Inc. (KNDI)
Headquartered in Jinhua, China, KNDI designs, develops, manufactures, and commercializes electric vehicle (EV) products, parts, and off-road vehicles in the People’s Republic of China and internationally.
For its fiscal year ended Dec. 31, 2021, KNDI’s net revenues increased 18.9% year-over-year to $91.49 billion. Its gross profit grew 20.5% from its year-ago value to $16.25 billion. Its income from operations for the year stood at $1.34 billion, reflecting a 77.1% increase year-over-year. And its net EPS was $0.30, up 257.9% from the previous year.
The Street expects KNDI’s revenue for its fiscal year ending Dec. 31, 2022, to improve 48.8% year-over-year to $136.10 million.
The stock has slumped 12.9% in price over the past month to close the last trading session at $2.44.
The only Wall Street analyst providing a rating for KNDI rated it Buy. The price target of $5.00 indicates a 104.9% potential upside.
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XPEV shares fell $22.28 (-100.00%) in premarket trading Monday. Year-to-date, XPEV has declined -57.68%, versus a -14.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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