Shares of Chinese electric vehicle company Xpeng rise after forecasting growth in deliveries

BEIJING — Chinese electric car company Xpeng saw its shares soar after announcing an improvement in its profit margin and an optimistic outlook for second-quarter deliveries.

From the company Stocks listed in Hong Kong rose more than 13% on Wednesday morning. U.S.-listed stocks rose nearly 6% in U.S. trading Tuesday following the release of first-quarter results.

Xpeng reported that vehicle margin increased 5.5% in the first three months of the year, compared to a negative 2.5% in the previous quarter. Automotive margin is a measure of profitability: the higher the margin, the more profit the company makes on its car sales.

The company expects deliveries of 29,000 to 32,000 cars in the second quarter, an increase of at least 25% year-on-year.

Xpeng delivered 21,821 cars in the first quarter of the year and 9,393 cars in April.

Following the earnings release, Nomura analysts said in a note on Wednesday that they were revising their estimates for Xpeng.

“Overall, we believe XPENG is moving forward with its business plans and believe it could see some growth in the future,” the report said.

“In the meantime, given the intensifying competition in the overall market, which makes smaller players more vulnerable, we remain slightly cautious and suggest investors to closely monitor the new model which will be launched under the MONA brand this month next,” Nomura analysts said.

Like other companies looking to stay competitive in China’s electric car market, Xpeng is expanding its product line with a lower-cost vehicle brand called Mona.

The first Mona car – an electric sedan priced under 200,000 yuan ($27,890) – is expected to go on sale in June, with mass deliveries expected to begin in the third quarter, according to the company.

Xpeng attributes several hundred million yuan in service revenue to its partnership with German automaker Volkswagen. The services segment overall jumped 93.1 percent year-on-year to 1 billion yuan in the first quarter.

The Chinese company said that in the first half of this year, it will partner with car dealership groups in Western Europe, Southeast Asia, the Middle East and Australia to open new stores. In total, Xpeng announced plans to expand its sales network to more than 20 countries. That’s according to a transcript of FactSet’s first-quarter earnings call.