The Zhitong Finance App learned that BOC International released a research report stating that it maintains the NIO SW (09866) “neutral” rating and predicts that sales will increase 19.1%/32.5% year-on-year in 2024/2025 to 19/252,000 units, and that the first “Alps” model will increase in 2025. However, due to the sub-brand's independent sales network and development expenses for new models, the bank expects losses to remain high. The bank believes that the industry price war will have a negative impact on the sector's short-term valuation and lowered the target price to HK$40.3.
The main views of JBC International are as follows:
The month-on-month increase in operating expenses resulted in larger losses than expected.
In the fourth quarter of 2023, NIO Auto's revenue was RMB 17.1 billion (same below), down 10.3% from the bank/market expectations; delivered 50,045 vehicles, down 9.7% from month to month; gross margin was 7.5%, of which gross margin was 11.9%, better than the bank's forecast, improving 0.9 percentage points from month to month, mainly due to lower costs. Sales/R&D expenses also hit a quarterly high, with a month-on-month increase of 30.7%/10.1%. Expenses remained high due to personnel and channel expansion and investment in new vehicle R&D. In the fourth quarter, the company's net loss was 5.36 billion yuan, up 17.8% from the third quarter, and the loss was about 7% higher than the bank/market's expectations. NIO's net loss of 20.7 billion yuan in 2023 was also 13%/11% higher than the bank/market's expectations. After investment institutions in Abu Dhabi invested 2.2 billion US dollars in cash, NIO's holdings in cash and cash equivalents rose to 57.3 billion yuan. NIO indicates that the number of vehicles delivered in the first quarter of 2024 is 31-33,000 vehicles, which is in line with expectations.
There was a lot of pressure to increase sales in the first half of the year, and the release of new cars by sub-brands in the second half of the year is likely to revive the upward trend.
NIO's delivery guidance for the first quarter was generally in line with market expectations. Most automakers had weak sales in the first quarter due to demand overdrafts and the Spring Festival holiday. Meanwhile, NIO released the 2024 facelift model in the 1st quarter, so the gross margin should be lower than in the 4th quarter due to the alternation of old and new models. The NIO brand has no plans to release new cars in 2024, so the bank expects sales to improve month-on-month in the 2nd quarter, but it is difficult to return to the monthly delivery level of 20,000 vehicles during the peak period last year. The release of the sub-brand “Alps” models in the second half of the year is expected to restore the upward trend in sales. According to public information, the first “Alps” model is an SUV, and the price will be around 250,000 yuan. The positioning is similar to the Tesla Model Y, and electricity can be exchanged for the mass market. Lower selling prices and exchangeable highlights are expected to support improved sales in the second half of the year. In addition to the “Alps” sub-brand, NIO will also launch a new sub-brand worth 100,000 to 200,000 yuan next year, positioning the mass market as the main focus.