Written by Cláudio Afonso | [email protected]
Deustche Bank analyst Edison Yu released today a note reiterating Nio’s Buy rating and the $70 price target, representing an upside of 206% for the next 12 months. The analyst believes that the secondary listing should put away the delisting fear for the Chinese Ev manufacturer.
“As outlined in our 2022 roadmap, we expected NIO to complete a HK listing in the first half of the year and the company confirmed approval of this during Asian morning hours. In our view, the delisting overhang on the stock should largely be gone now and focus will shift toward the anticipated volume famo-us of 3 new models this year, starting in late March with the E17 flagship sedan. The HK listing was indeed supposed to happen earlier but as reported by the media, regulators wanted to fully understand the charity user trust structure created by CEO/founder William Li before signing off.”
“The listing will not raise additional capital (i.e., no dilution) and instead will utilize a listing by way of introduction method where NIO along with lencent will lend out 41.4m shares to a designated dealer (Morgan Stanley) to facilitate initial trading of the k stock (ticker: 9866) beginning on March 10th. Over time. NO exoccts a meaningful number of exisung holders to naturally convert their US ADR shares to H-shares. We think management wanted to avoid raising capital given the stocks recent large decline (-34% YTD vs. NASDAQ-13%). In relation, NIO also applied for a similar type of listing in Singapore and is awaiting approval from regulators. We suspect this was done as a supplementary option in case the HK listing process dragged on even longer.”
“We had initially expected NIO to conduct a dual primary HK listing, providing added protection in respect to a potential US delisting and benefit of inclusion into the Mainland StOck Connect mechanism. In response, management believes a secondary listing provides ample protection and suggested that the HK exchange is well aware of the broader US delisting risk. Hence, a process to convert a secondary listing to primary one would not be overly difficult. Moreover, NIO thinks it can better tap into the Mainland China investor base through a direct A-share listing of its NIO China entity as opposed to leveraging the Mainland Connect”.
Ealier today, Bernstein analyst Eunice Lee reiterated a Market Perform rating and $40.00 price target (down from $45) on NIO after the company unveiled that is set to offer its shares for trading in Hong Kong as soon as March 10th.
Lee sees the latest move as a positive step towards eliminating the delisting risks concerning ADRs on American Exchanges. After Hong Kong and Singapore, the analyst sees potential for Nio to be traded on Shanghai stock exchange in the future.
“Listing by introduction is a quicker way of getting listed and poses no dilution to existing shareholders. The downside of a secondary listing is that the company is restricted from raising fresh capital or issuing new shares in the next 6 months. NIO will not be eligible for trading on the Hong Kong-China Stock Connect. In comparison, XPeng and Li Auto both have dual-primary listings in the U.S. and Hong Kong and would be eligible for trading by qualified Chinese investors through the Stock Connect.”
The company announced recently the opening of its new NIO House located in Yueqing Bay, Zhejiang Province in eastern China. The Chinese EV maker has currently 44 Nio Houses across the globe and opened its first European one in September 2021 located in Oslo (Norway) — the country with the highest EV penetration.
Last week, NDS (Navigation Data Standard) Association announced the Chinese EV maker Nio as their new member. Martin Schleicher, NDS Chairman, describes Nio as a “strong Asian partner” that has a “future vision”. NDS offers a well-defined spec for how to store map data and it allows flexibility for customized user experiences. Its maps work worldwide and are globally adopted.
“Navigation technology and globally reliable data standards are another field that NIO can advance with its vision and development strength. Therefore, the NDS membership is a great enrichment for the future of this global association of innovation-focused companies and their common goals.” — NDS stated.
Recently, Nio posted 8 new job vacancies in London (England) suggesting that it can be its next European Market after the already announced Sweden, Denmark, Germany and The Netherlands. Nio started selling its ES8 Model in late 2021, in Norway (the country with the highest EV penetration) and is now intensifying its move to the United Kingdom. Nio has currently 11 vacancies for England, eight of them posted during the last 24h on LinkedIn.
Written by Cláudio Afonso | [email protected]
