Maintain BUY. Xpeng’s 4Q25 net profit beat on R&D service income. We project its sales volume in 2H26E to double HoH despite a weak 1Q26, fuelled by aggressive export plans and 4 new models. We also believe that its mass production of humanoid robots this year could be a positive catalyst for shares.
4Q25 net profit beat on R&D services. Xpeng’s 4Q25 revenue rose 38% YoY to all-time high of RMB22.3bn, or 5% higher than our prior forecast, mainly due to higher-than-expected technical R&D service income from VW and carbon credit trading. Vehicle ASP in 4Q25 was largely in line, while vehicle GPM of 13.0% was 1.3ppts lower than our projection. SG&A and R&D expenses were both slightly higher than our estimates, while highmargin R&D services led to an all-time high GPM of 21.3%, the narrowest operating loss in history and a first-time-ever net profit of RMB383mn in 4Q25.
New models, exports to fuel sales growth. Although Xpeng’s 1Q26E sales outlook was lower than our prior forecast, which could lead to a net loss again on our estimates, the automaker’s FY26E export target (doubled YoY to 90,000 units with a doubled number of showrooms) exceeded our expectation. We lower our FY26E sales volume forecast by 7% to 0.54mn units following the weak 1Q26. We expect 2H26E sales volume to almost double HoH, aided by exports and 4 new models, especially two new Mona SUVs. Our forecast implies 17% YoY growth in its domestic sales volume.
Humanoid robot could be a positive catalyst in 2H26. Xpeng targets to produce 2,000 Iron robots by the end of this year, based on our supply chain channel checks. Xpeng also targets an annual sales volume of 1mn units for humanoid robots by 2030, which could double its revenue. We have not factored in any income from robots in our FY26E forecast and only little for FY27E, but we believe Xpeng’s current exposure to robots could lift its valuation.
Earnings/Valuation. We project Xpeng’s FY26E revenue to rise 23% YoY with a GPM of 18.5%. We revise our FY26E operating loss forecast from RMB253mn to RMB1.27bn amid lowered sales volume outlook and higher R&D expenses. Accordingly, we cut our FY26-27E non-GAAP net profit estimates by 59% and 37% to RMB0.9bn and RMB2.3bn, respectively, adjusted for share-based payment and non-cash tax benefit. We maintain our BUY rating but cut our ADR/H-share target prices from US$29.00/HK$113.00 to US$24.00/HK$94.00, based on 1.7x (prior 1.8x) our FY26E P/S to reflect our earnings cuts. Key risks include lower sales/GPM than we expect, slower monetization for robots and robotaxis, as well as a sector de-rating.