Earnings Report: NIO (LIVE UPDATES)

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

The EV manufacturer NIO announced today its unaudited financial results for the fourth quarter and the full year of 2021. The company had a total Revenue of $1.55B in Q4 2021 (an increase of 52.0% Year-over-Year) beating Wall Street expectations by $20M.

Gross margin was 17.2% in the fourth quarter of 2021, compared with 17.2% in the fourth quarter of 2020 and 20.3% in the third quarter of 2021.

Cash and cash equivalents, restricted cash and short-term investment were RMB55.4 billion (US$8.7 billion) as of December 31, 2021

Vehicles Sales

Q4 — Vehicle sales were RMB9,215.4 million (US$1,446.1 million) in the fourth quarter of 2021, representing an increase of 49.3% from the fourth quarter of 2020 and an increase of 6.7% from the third quarter of 2021.

Full year of 2021 — Vehicle sales were RMB33,169.7 million (US$5,205.1 million), representing an increase of 118.5% from the previous year.

Vehicles Margin

Q4 — Vehicle margin was 20.9% in the fourth quarter of 2021, compared with 17.2% in the fourth quarter of 2020 and 18.0% in the third quarter of 2021.

Full year of 2021 — Vehicle margin was 20.1%, compared with 12.7% for the previous year.

Total Revenues

Q4 — Total revenues were RMB9,900.7 million (US$1,553.6 million) in the fourth quarter of 2021, representing an increase of 49.1% from the fourth quarter of 2020 and an increase of 1.0% from the third quarter of 2021.

Full year of 2021 — Total revenues were RMB36,136.4 million (US$5,670.6 million), representing an increase of 122.3% from the previous year.

Gross Profit

Q4 — Gross profit was RMB1,699.5 million (US$266.7 million) in the fourth quarter of 2021, representing an increase of 48.8% from the fourth quarter of 2020 and a decrease of 14.7% from the third quarter of 2021.

Full year of 2021 — Gross profit was RMB6,821.4 million (US$1,070.4 million), representing an increase of 264.1% from the previous year.

Gross Margin

Q4 — Gross margin was 17.2% in the fourth quarter of 2021, compared with 17.2% in the fourth quarter of 2020 and 20.3% in the third quarter of 2021. The decrease of gross margin from the third quarter of 2021 was mainly resulted from the sales of automotive regulatory credits in the third quarter of 2021 which contributed a higher gross margin.

Full year of 2021 — Gross margin was 18.9% for the full year of 2021, compared with 11.5% for the previous year.

During Q3 2021 Earnings Call, NIO’s CEO William Li said that the company aims to achieve an annual vehicle gross margin of 25% in the future:

“For the NT2.0 product, we expect that with the economy of scales and the volume ramp-up, as well as the optimizations in every aspect. We should be able to average 25% vehicle gross margin in the long run”.

Net Loss

Q4 — Net loss was RMB2,143.4 million (US$336.4 million) in the fourth quarter of 2021, representing an increase of 54.4% from the fourth quarter of 2020 and an increase of 156.6% from the third quarter of 2021. Excluding share-based compensation expenses, adjusted net loss (non-GAAP) was RMB1,746.7 million (US$274.1 million) in the fourth quarter of 2021, representing an increase of 31.5% from the fourth quarter of 2020 and an increase of 206.6% from the third quarter of 2021.

Full year of 2021 — Net loss was RMB4,016.9 million (US$630.3 million), representing a decrease of 24.3% from the previous year. Excluding share-based compensation expenses, adjusted net loss (non-GAAP) was RMB3,006.8 million (US$471.8 million) for the full year of 2021, representing a decrease of 41.2% from the previous year.

Earnings per Share

Q4 — Basic and diluted net loss per American Depositary Share (ADS) were both RMB1.36 (US$0.21) in the fourth quarter of 2021. Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted basic and diluted net loss per ADS (non-GAAP) were both RMB1.07 (US$0.16).

Full year of 2021 — Basic and diluted net loss per ADS were both RMB6.72 (US$1.05). Excluding share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, adjusted basic and diluted net loss per ADS (non-GAAP) were both RMB1.89 (US$0.29).

The Company’s management will host an earnings conference call at 9:00 PM U.S. Eastern Time on March 24, 2022 (9:00 AM Beijing/Hong Kong Time on March 25, 2022). A live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.nio.com/news-events/events.

Wall Street Expectations

Wall Street expects NIO to lose 14 cents per share vs. a loss of 16 cents a year ago. Revenue is seen jumping 49% year over year to $1.53 billion, according to FactSet. But that would mark a slowdown in sales growth for a third straight quarter and would be down sharply from Q3’s 122% sales gain.

NIO Stock

NIO shares closed up 0.55% today at $21.99, indicating a Market Cap value of $33.95 Billion. The stock price have declined about 30.59% year to date, 60% from their 52-week high in July of $55.13, and are down about 67% from their all-time high of $66.99.

In 2021, the EV maker delivered 91,429 vehicles , increasing by 109.1% year-over-year. Cumulative deliveries of the ES8, ES6 and EC6 as of December 31, 2021 reached 167,070 units.

CEO and CFO Comments

“We concluded the year of 2021 on a strong note with an annual delivery of 91,429 vehicles in total, representing an increase of 109.1% year-over-year, despite all the challenges including the supply chain volatilities in particular. In light of the seasonality and the Chinese New Year holiday, NIO delivered 9,652 vehicles in January and 6,131 vehicles in February, representing a growth of 34% and 10% year-over-year, respectively. We expect to deliver a total of 25,000 to 26,000 vehicles in the first quarter of 2022,” said William Bin Li, founder, chairman and chief executive officer of NIO. “2021 had been a year of making decisive investments in products and technologies, as well as in power and service infrastructures. It had also been a year of elevated operations in fast iteration, supply chain response and innovation, production capacity expansion and systematic quality management to make comprehensive preparations for our development in the next phase. On top of our growing user base in China, 2021 also marked the beginning of our global market expansion starting from the launch and deliveries of NIO vehicles in Norway in September 2021.”

“2022 will be a year of reacceleration for NIO. We will deliver three new products based on NIO Technology Platform 2.0 this year. In March, we kicked off the test drive of ET7 and will start its delivery on March 28, 2022. After the launch of ET5 in December 2021, we have received great feedback from prospective users, and expect to start its delivery in September 2022. In addition, we plan to offer our products and services in more countries and regions in 2022 to further expand our global user community,” concluded Mr. Li.

“On March 10, 2022, thanks to the trust and support of our users, investors and partners, NIO started to be listed by way of introduction on the Main Board of The Stock Exchange of Hong Kong Limited,” added Steven Wei Feng, NIO’s chief financial officer. “With steadily increasing deliveries, stable average selling price, and improving manufacturing efficiency, we have achieved solid financial performance for the fourth quarter and full year of 2021 with the vehicle margin reaching 20.1% in 2021. To provide better experience to our growing global user base and accelerate our market expansion, we will continue to make decisive investments in products, core technologies and services for the years ahead.”

Price Targets

Earlier today, 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.

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.

On March 20, Deutsche Bank analyst Edison Yu released 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.

On February 8, Barclays analyst Jiong Shao initiated coverage on NIO with an overweight rating and a $34.00 price target. “Some investors may be concerned that NIO’s unit growth has not been as fast as peers such as XPEV and LI. We believe that concern should be somewhat alleviated now that NIO is set to double production capacity.” — Shao noted.