In a research report issued on May 23, Morgan Stanley highlighted that XPeng Motors (09868.HK) is poised to witness a significant uptick in its automotive profit margins during the second quarter and beyond, driven by factors such as an elevated average selling price, an optimized product mix, cost reduction initiatives, and economies of scale. Management has affirmed that the profit margins of new models remain robust, achieving double-digit figures. Despite issuing a relatively conservative earnings forecast for the second quarter, Morgan Stanley anticipates a surge in sales and profit margins in the second half of the year, with the potential for fourth-quarter earnings to invigorate market sentiment.

The investment bank has maintained its "Overweight" rating for XPeng Motors' American depositary shares (ADS), with a target price of $26, and has set a target price of HK$101 for its Hong Kong-listed shares, reflecting a positive outlook on the company's future performance.