Written by Cláudio Afonso | LinkedIn | X
In a new research note titled “1Q24 slightly shy on non-op; 2Q24 volume in line with raised expectation,” Morgan Stanley has reiterated the firm’s price target on Nio shares following the first quarter financial results.
The analyst Tim Hsiao reaffirmed the $10 price target on the stock implying an upside potential of 90 percent despite the “worse than expected” net loss reported by the electric vehicle maker.
“Nio reported a narrowing net loss of RMB 5.3 billion in 1Q24 (vs. RMB 5.6 billion in 4Q23), worse than our expectation of an RMB 4.5 billion loss, mainly on lower non-op gains,” Hsiao wrote.
The analyst noted the missed result on total revenue compared to the guidance given by Nio that was expecting to reach RMB 10-11 billion.
“Total revenue dropped 24 percent quarter over quarter to RMB 9.3 billion vs. the company’s original guidance of RMB 10-11 billion, given its reduced volume target and suggesting a 10 percent quarter over quarter average selling price downtick,” the analyst commented.
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The decreased vehicle gross margin to 9.2 percent was in line with Morgan Stanley’s expectations.
“Vehicle gross margin decreased 7.7 ppt QoQ to 9.2 percent, largely in line with our forecast, as smaller scale, an inferior mix and higher discounts more than offset the benefits of lower lithium and battery prices. OpEx came in slightly lower, with RMB 2.9bn R&D (28 percent quarter over quarter) and RMB 3 billion SG&A (23 percent quarter over quarter)”.
“2Q24 volume guidance of 54-56k units up 80-86 percent QoQ. The market’s raised expectation of 18-20 percent run-rate for June. Revenue guidance of RMB 18.5-19.0 billion (up 57-73 percent QoQ) suggests high single-digit ASP downtick in 2Q24, all eyes are on the 2Q GPM trajectory,” the analyst concluded.
Earlier today, BofA Securities analyst Ming Hsun Lee raised the price target on Nio shares to $6.00 (from $5.90) while maintaining a Neutral rating.
The company unveiled on Thursday ambitious plans for its upcoming NT3 platform during the Q1 2024 earnings call. The new platform, in which the new flagship sedan Nio ET9 will be built in 2025, aims to achieve a significant milestone: an average of 20 percent vehicle margin.
In the subsequent conference call, founder and CEO William Li revealed that the company is gearing up to enter the UAE market later this year.
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“Regarding our entry into the Middle East market, we are preparing to offer our products and services in the UAE,” the chief executive stated.
The company expects second-quarter vehicle deliveries to range between 54,000 and 56,000 units, anticipating 17,836 to 19,836 vehicles to be delivered in June.
Nio achieved its best monthly result ever in May, delivering 20,544 vehicles. This followed the delivery of 15,620 units in April, bringing the total to 36,154 units for the first two months of the second quarter.
The figures from the month of May represent a year on year increase of 233.8 percent as the EV maker delivered 6,155 a year ago. The last time the company delivered more than 20 thousand units was in July last year when it registered 20,462 vehicles sold.
Written by Cláudio Afonso | LinkedIn | X
