BOCOM International reiterated on Monday its Buy rating and set a price target of HK$65.83 on the Chinese EV maker Nio Inc., citing first-quarter results it said beat expectations.
The note from BOCOM International, the investment-banking arm of China’s Bank of Communications, extends a run of bullish analyst moves that followed Nio’s first-quarter report last week.
The brokerage said the quarter marked a shift for Nio from repairing sales volume to proving out its operating model, with the focus now on a rising average selling price, stable margins and tighter spending.
Nio Inc.‘s average selling price rose by approximately 16% year on year to 279,973 yuan — equivalent to $41,200.
The Quarter Behind the Call
Nio delivered 83,465 vehicles in the first quarter, up 98.3% from a year earlier, and posted revenue of 25.53 billion yuan, up 112.2%.
Vehicle sales revenue rose 129.2% to 22.78 billion yuan.
The company turned a quarterly non-GAAP operating profit positive for the first time, at 67 million yuan, with adjusted net profit of 44 million yuan.
BOCOM International said the improvement was not only driven by higher volume.
The brokerage credited a richer mix weighted toward the higher-margin ES8, a higher average selling price and tighter cost discipline.
Research and development (R&D) spending fell 40.7% from a year earlier to 1.89 billion yuan, while selling, general and administrative costs dropped 20.5% to 3.5 billion yuan.
The two line items together fell about 2.2 billion yuan from a year earlier.
The average selling price climbed to about 273,000 yuan, up 15.6% year-over-year and 7.8% from the prior quarter.
The vehicle margin reached 18.8%, up 8.6 percentage points from a year earlier, while the other-sales margin hit 20.6%, a four-year high the brokerage tied to improving profitability in services, energy and community businesses.
Where the Focus Turns Next
BOCOM International framed the second quarter as the test of whether Nio can deliver on its guidance.
Nio has guided for second-quarter deliveries of 110,000 to 115,000 vehicles, up 52.7% to 59.6% from a year earlier, and revenue of 32.78 billion to 34.44 billion yuan.
The brokerage noted that the guidance implies combined May and June deliveries of 80,644 to 85,644 vehicles, or a monthly average roughly 37% to 46% above April’s level.
If May tracks close to April, BOCOM said, June would need to deliver about 51,000 to 56,000 vehicles, making the month’s production ramp the key to meeting the target.
BOCOM International pointed to the ES9 launch later this week, the ramp of the Onvo L80, a five-seat ES8 due in the second half and a June upgrade to the Nio World Model assisted-driving system as catalysts.
The brokerage flagged price competition, rising raw-material, memory and battery-material costs, per-vehicle cost pressure above 10,000 yuan, and slower-than-expected brand awareness at Onvo as the main risks.
Over the medium term, BOCOM said the market will watch whether Nio can hold its 17% to 18% full-year vehicle-margin target under cost pressure and sustain non-GAAP operating profit.
Other Recent Targets
The Monday note follows a cluster of analyst moves last week.
CMB International upgraded Nio to Buy from Hold on Friday, its first Buy rating on the stock in roughly three years, with analyst Ji Shi setting a $7.00 target on the US-listed shares.
Citi raised its target to $8.20 while keeping a Buy rating, and Bank of America nudged its target to $6.80 but held Neutral, wary of margin pressure from rising raw-material costs.
Bernstein lifted its target to $6.00 but stayed at Market Perform, the most cautious major call on the stock.
A Difficult Week for the Shares
The bullish notes have done little for the stock.
Both the US and Hong Kong markets were closed on Monday.
Nio‘s US-listed shares last closed at $5.20, down 7.14% on Friday, while its Hong Kong shares edged 0.42% lower to HK$42.78.
The Friday slide came as US-listed Chinese stocks fell broadly after Beijing escalated a crackdown on the offshore brokers that channel mainland money into those shares, and after a reversal during Thursday’s earnings call when management warned of rising raw-material costs.
As EV reported on Sunday, a petition asking US regulators to review trading in Nio shares gathered more than 1,500 signatures within 72 hours.
