(Photo by Drew Angerer/Getty Images)

China Renaissance initiates coverage on NIO with a price target of $32.40 and a Buy rating

Written by Cláudio Afonso | info@claudio-afonso.com

China Renaissance analyst Yiming Wang initiated coverage on NIO shares with a Buy rating and a price target of $32.40. The analyst enhanced NIO’s sales growth in 2021 expecting the company to deliver 160,000 units this year and to reach breakeven as soon as next year. The price target represents an upside potential of 48% based on the last closing price at $21.87. Earlier today, announced that the first batch of NIO ET7 production vehicles was officially rolled off the production line at Hefei. The company will report its Q4 and 2021 Earnings Results later today, after the U.S. Markets closing bell.

(Photo by Drew Angerer/Getty Images)

China Renaissance comments

“NIO’s sales grew rapidly in 2021, when the company delivered 91,429 units, up 65% YoY. We expect its vehicle deliveries to remain strong in 2022E/23E, up 76%/50% YoY to 160,631/ 241,138 units, and we estimate revenue will grow at a 2020-23E CAGR of 83%. We forecast breakeven in 2023E, with NIO achieving net profit of RMB759mn (GAAP basis). NIO’s GPM should improve with the launch of NP2.0 and better economies of scale. We assign a 5x 2022E target P/S to value NIO and derive our TP of US$32.40.”

Source: NIO

“NIO delivered 91,429 vehicles in 2021 in total, representing a strong increase of 109.1% year-over-year. As of December 31, 2021, cumulative deliveries of the ES8, ES6 and EC6 reached 167,070 vehicles”. As said by NIO, the 91,429 units delivered in 2021 represent an year-over-year increase of 109.1% and not the 65% mentioned by the analyst.

Founded in 2005, China Renaissance (CR) is a leading financial institution that provides private placement and M&A advisory, equity underwriting, sales & trading, research, investment management and other services.

On March 23, NIO’s Europe Vice-President was among the keynote speakers at the SMMT Electrified 2022 conference held in London, United Kingdom. Hui Zhang, that works for NIO since January 2016, enhanced the advantages of the Battery-as-a-Service. Earlier this week, Morgan Stanley analyst Tim Hsiao lowered NIO’s price target to $34 from $66 while maintaining an Overweight rating. The new 12-month price target represents a 48% cut from the previous one ($66) posted on December, 2021.

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Deutsche Bank analyst Edison Yu released on Sunday a note lowering NIO’s price target from $70 to $50, maintaining the Buy rating — an upside of 139.7% for the next 12 months. The analyst added that “the main risks for NIO are supply chain constraints and regulatory scrutiny.” Yu also warned on “supplier shortages for chips and battery cells” that can limit NIO’s sales growth.

According to a video posted on TikTok, NIO has thousands of models parked at NIO’s Hefei Factory, in China. The company has been keeping the secrets indoors without unveiling pre-orders numbers, test-drives scheduled, or other relevant numbers and JAC x NIO Factory is not an exception. The EV manufacturer will launch its new five-seater SUV in mid-April and will show it to the public at the 2022 Beijing Auto Show. The international automotive exhibition will take place at the China International Exhibition Center of Beijing from April 21st to April 30th.

NIO announced on March 1st that delivered 6,131 vehicles during last month.February deliveries are often affected by the Chinese Spring Festival Hollidays where the factories usually close from January 31st to February 6th.

Written by Cláudio Afonso | info@claudio-afonso.com