Company Reports

Nio’s fourth-quarter revenue was at the high end of its guidance. Vehicle margin, however, missed the company’s previous guidance of around 15%, despite gaining 5 percentage points year over year to 12%, benefiting from lower battery cost and inventory provision in the prior year quarter. With lower vehicle margin and selling price, as well as rising operating expense assumptions, we increase our net loss forecast for 2024-25 and reduce our fair value estimate to USD 9.10 per ADS (HKD 70.10 per share) from USD 12.50 per ADS (HKD 96.30 per share). Our fair value implies a forward 2024 price/sales ratio of 1.7 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 298,000 to CNY 598,000, with a 465-710 km driving range. For new models, Nio started delivery of its midsize ET5 sedan in third-quarter 2022, as well as the mid-to-large five-seater SUV ES7. The company also upgraded its first-generation SUV models ES8, ES6, and EC6 in the second quarter of 2023. It also plans to launch a new mass-market brand in 2024 to seize robust demand while retaining Nio’s premium image.

Nio’s third-quarter revenue was at the low end of its guidance. Vehicle margin, although declined 5 percentage points year over year to 11% due to product mix change and price promotions, staged 5 percentage points’ recovery from last quarter, benefiting from larger volume and lower battery costs. With lower vehicle selling prices and rising operating expense assumptions, we increased our net loss forecast for 2023-25 and reduced our fair value estimate to USD 12.50 per ADS (HKD 96.30 per share) from USD 13.30 per ADS (HKD 103.00 per share). Our fair value estimate implies a forward 2024 price/sales ratio of 2 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 328,000 to CNY 656,000, with a 450-700 km driving range. For new models, Nio started delivery of its midsize ET5 sedan in third-quarter 2022, priced at CNY 328,000-CNY 386,000, as well as the mid-to-large five-seater SUV ES7. The company also upgraded its first-generation SUV models ES8, ES6, and EC6 in the second quarter of 2023. It also plans to launch a new mass-market brand in 2024 to seize robust demand while retaining Nio’s premium image.

Nio’s second-quarter revenue was at the low end of its guidance. Vehicle margins declined 10.4 percentage points year over year to 6.2% due to product mix change and promotions on older models. In addition, delivery guidance for the third quarter missed market expectations. With lower vehicle margins and rising operating expense ratios assumptions, we increase our net loss forecast for 2023-24 and delay our breakeven year forecast to 2026.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 328,000-CNY 656,000, with 450-700 km driving range. For new models, Nio started delivery of the midsize ET5 sedan in third-quarter 2022, priced at CNY 328,000-CNY 386,000, as well as the mid-to-large five-seater SUV ES7. The company also upgraded its first-generation SUV models ES8, ES6 and EC6 in the second quarter of 2023. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.

Nio announced a strategic investment from CYVN Holdings, an investment vehicle majority-owned by the Abu Dhabi government. CYVN, through a private placement, will subscribe to 84.7 million newly issued Class A ordinary shares of Nio for an aggregate of USD 738.5 million in cash. The purchase price of USD 8.72 per share is determined as the volume weighted average price of Class A ordinary shares over the seven consecutive trading days preceding June 19 and adjusted for the American depositary share ratio. We view the fund-raising activity positively as it removes investors’ concern on the company’s near-term liquidity. We maintain our fair value estimate of USD 14 per ADS (HKD 108 per share), which implies a forward price/sales ratio of 2.6 times.

Nio’s first-quarter revenue was close to the low end of its guidance. Vehicle margin declined 13 percentage points year over year to 5.1% due to product mix change and promotions on older models. However, management indicated that vehicle margin will stage a sequential recovery in the second half on better product mix. With enlarged losses on softer vehicle margin and rising operating expense ratios, we increase our net loss forecasts for 2023-24. We reduce our fair value estimate to USD 14.00 per ADS (HKD 108 per share) from USD 15.50 (HKD 120). Our fair value implies a forward price/sales ratio of 2.6 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 328,000-CNY 656,000, with 450-700 km driving range. For new models, Nio started delivery of the midsize ET5 sedan in third-quarter 2022, priced at CNY 328,000-CNY 386,000, as well as the mid-to-large five-seater SUV ES7. The company will upgrade its first-generation SUV models ES8, ES6 and EC6 in the second quarter of 2023. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.

Nio’s fourth-quarter vehicle margin declined 14 percentage points year over year to 6.8% due to: 1) inventory provisions and losses on purchase commitments related to last-generation ES8, ES6 and EC6 models that are scheduled to be phased out; and 2) rise in battery cost. Management indicated that vehicle margin would stage a sequential recovery in the second half this year on better product mix. With enlarged losses on softer vehicle margin, we slightly increase our net loss forecast for 2023-24. We reduce our fair value estimate to USD 15.50 per ADS (HKD 120 per share) from USD 16.00 per ADS (HKD 126 per share). Our fair value implies a forward price/sales ratio of 2.1 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 328,000-CNY 656,000, with 450-700 km driving range. For new models, Nio started delivery of the midsize ET5 sedan in third-quarter 2022, priced at CNY 328,000-CNY 386,000, as well as the mid-to-large five-seater SUV ES7. The company will upgrade its first-generation SUV models ES8, ES6 and EC6 in the second quarter of 2023. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.

We see intensifying price pressure in China's new energy vehicle, or NEV, market, especially in the mass-market and entry-level premium segments. After Tesla’s late October China price cuts, several automakers followed suit, offering direct discounts, insurance rebates, and other incentives. Coupled with the national subsidy expiring in 2023, we anticipate the CNY 150,000-CNY 300,000 price segment to face greater competition. With such a backdrop, we maintain our preference for Nio for its premium brand positioning and BYD for its strong plug-in hybrid model lineup.

Nio’s third-quarter revenue was near the midpoint of the company’s guidance and its first nine months' revenue accounted for 57% of our previous full-year estimate. With enlarged losses on softer vehicle margin and rising operating expense levels, we slightly increase our net loss forecast for 2022-2023. Management indicated the company aims to deliver 20,000 units of vehicles in December, which we believe beats market expectations.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 368,000-CNY 634,000, with 450-700 km driving range. For new models, Nio targets starting delivery of the midsize ET5 sedan in third quarter 2022, with an expected price of CNY 328,000-CNY 386,000. It also released the mid-to-large five-seater sport utility vehicle, or SUV, ES7 in June, with delivery also in the third quarter. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.

Nio delivered solid second-quarter revenue that exceeded the high end of company’s guidance by 2% and our estimate by 6%. Despite enlarged losses on rising operating expense levels, management is confident of delivering its full-year target of around 150,000 units, which we believe is a positive surprise to the market. We reduce our fair value estimate to USD 25.50 per ADS (HKD 200.00 per share) from USD 27.00 per ADS (HKD 212.00 per share) but maintain our positive view on the company. Our fair value implies a forward 2023 price/sales ratio of 2.8 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 368,000-CNY 634,000, with 450-700 km driving range. For new models, Nio targets starting delivery of the midsize ET5 sedan in third quarter 2022, with an expected price of CNY 328,000-CNY 386,000. It also released the mid-to-large five-seater sport utility vehicle, or SUV, ES7 in June, with delivery also in the third quarter. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.

We initiate coverage on Nio with a no-moat rating and fair value estimate of USD 27 per ADS (HKD 212 per share). As a leading electric vehicle, or EV, manufacturer in China targeting the premium segment, Nio will benefit from vehicle electrification and consumption upgrade trends. Given significant growth opportunities, we forecast a 56.6% 2021-24 revenue CAGR, with the first profitable year in 2025. Our fair value implies a forward 2023 price/sales ratio of 3.0 times.

Nio is a leading electric vehicle, or EV, manufacturer in China, targeting the premium segment. Its current model portfolio’s retail prices range from CNY 368,000-CNY 634,000, with 450-700 km driving range. For new models, Nio targets starting delivery of the midsize ET5 sedan in third quarter 2022, with an expected price of CNY 328,000-CNY 386,000. It also released the mid-to-large five-seater sport utility vehicle, or SUV, ES7 in June, with delivery also in the third quarter. It also plans to launch a new mass-market brand in 2024 to seize the robust demand while retaining Nio’s premium image.