Daiwa Securities raised their forecast for Xpeng's vehicle deliveries next year from 90,000 units to 185,000 units.

Daiwa Securities reiterated its Buy rating on Xpeng Motors shares traded in Hong Kong and raised its price target by 10.53 percent to HK$231 from HK$209.

At press time, Xpeng was down 2.08 percent to HK$207.2 in Hong Kong, and the price target implies an 11 percent upside.

Daiwa Securities raised their forecast for Xpeng's vehicle deliveries next year to 185,000 units from 90,000 units and raised their revenue forecasts for the company in 2021 and 2022 by 6 percent and 10 percent respectively, according to a report shared by Sina.

Earlier this week, Xpeng reported financial results showing that it reported revenue of RMB 5.72 billion ($888 million) in the third quarter, up 187 percent year-on-year and above Wall Street analysts' estimates of RMB 5.21 billion.

The company's gross margin was 14.4 percent in the third quarter, up from 11.9 percent in the second quarter and 4.6 percent in the same period last year. It reported a 13.6 percent gross margin on vehicles in the third quarter, up from 11.0 percent in the second quarter and 3.2 percent in the year-ago quarter.

Daiwa Securities said the improvement in Xpeng's vehicle gross margin was driven by a 1.99x year-on-year increase in deliveries and higher sales of the Xpeng P7.

They believe Xpeng's vehicle gross margin could reach 21 percent in 2022 due to higher capacity utilization and more revenue from Xpilot.

Xpeng aims to hit 1.5 units per month delivery in December, and Daiwa Securities believes the 15,000 units per month average delivery performance will continue next year.