Nio: Strategic Placement Should Remove Near-Term Concern Regarding Cash Liquidity

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.