China’s investment bank CICC issued a new research note on Tuesday maintaining the outperform rating on Nio‘s Hong Kong-traded shares wile setting a price target of $HK62, equivalent to $7.94 USD.
Nio shares closed at HK$41.55 on the Hong Kong Stock Exchange on Tuesday, indicating that the price target from CICC suggests an implied upside potential of 49 percent.
The investment bank, that has about $90bn in assets and shareholders including China giants Tencent and Alibaba, expects Nio to exceed 20,000 vehicles delivered for two consecutive months from May to June.
Last Saturday, Nio reported the delivery of 20,544 vehicles marking its best monthly result ever.
Eyeing the first quarter earnings later this week, CICC expects gross margin to be between 10 percent to 15 percent as it sees the company with “deep technology accumulation” adding that is expected to “maintain stable sales through mass production of technology”.
“Nio Power’s financing has continued to expand, the Baas effect has exceeded expectations, and the business model has become clearer. The company has recently signed strategic cooperation agreements for power exchange business with a number of car companies in a row, and announced on May 31 that its Nio Energy Company has received 1.5 billion yuan of strategic financing from Wuhan Guangchuang Fund,” the bank wrote in the new research note.
CICC said it expects Nio to reduce its operation and maintenance costs thanks to its full battery life cycle management.
“In addition, the company further reduced the starting price of BaaS in March to cope with fierce competition in the industry. The bank believes that the company’s full battery life cycle management is expected to reduce technology, operation and maintenance costs, and can support diversified price strategies without affecting profits,” CICC added.
The firm expects Onvo, Nio’s first sub-brand that was launched in mid-May, to bring “incremental contributions through the cost-effective route”.
“Overall, the company’s charging and switching business model is clear. Nio is expected to maintain stable base plate sales, and Onvo will start mass market growth. Recently, the company officially released the Onvo brand and entered the mainstream home user market. The pre-sale price of the first SUV Onvo L60 starts at 219,900 yuan, which is expected to bring incremental contributions through the cost-effective route,” the investment bank stated.
“At the same time, the BaaS solution is expected to become the core differentiated competitiveness of Onvo entering the 200,000 yuan price segment. In terms of the main brand, the company has deep technology accumulation and is expected to maintain stable sales through mass production of technology,” CICC added.
At the end of April, the global pilot assistance NOP+ function will be iterated, and the lane centering assistance and full-scene false acceleration suppression assistance will be enhanced. Excellent performance.
“Looking forward to the whole year, the company plans to increase end-to-end R&D investment and talent recruitment, and plans to launch end-to-end active security features in 2024,” CICC concluded.
Nio registered 6,700 insurance registrations in China last week setting a new record, according to the latest numbers published on Tuesday by the automaker Li Auto.
From May 27 to June 2, the Shanghai-headquartered manufacturer increased its weekly registrations by 24 percent from the 5,400 units registered in the previous week.
In a new research note, Morgan Stanley said Nio‘s record deliveries in May were “in line with raised expectations” as the firm keeps the $10 price target.
Based on the last closing price prior to the note, Morgan Stanley’s price target implies an upside potential of about 85 percent as the firm keeps the overweight rating on the shares.
Nio announced on Friday that has secured a significant strategic investment of 1.5 billion rmb (approximately $232.56 million) for its “Nio Power” company from Wuhan Guangchuang Fund and other investors.
