Morgan Stanley analyst Tim Hsiao released a note on Tuesday saying that the easing of the lockdown measures in Shanghai will help NIO to reach big gains in the near term. The Government of Shangai confirmed on Monday the resumption of Public Transportation in and out of Residential Areas starting next Wednesday, on June 1st.
The analyst commented: “”We believe the share price will rise in absolute terms over the next 15 days. The stock has traded off lately partially due to lingering concerns over the suppressed sales amid the lockdown in Shanghai, which made up 15%+ of the company’s sales in 2021”.
“The associated production disruption also adversely affects the ramp-up/launch of NIO’s new models and aggravates the market’s concerns over NIO‘s sales momentum. With gradual reopening in the Yangtze River Delta region as well as the Rmb10k subsidy provided by the Shanghai government to consumers to replace old cars with electric cars, we believe NIO is well positioned to capitalize on such local stimulus programs and resume sales momentum in the upcoming months. We estimate that there is about a 70%,” he added.
According to sources related with the matter, the EV maker NIO just completed the construction of the modern assembly line at its second factory located at Xinqiao, Hefei, Anhui province. In less than 7 months, NIO went from breaking ground to the completion of the main project and the installation of process equipment.