The company's recent situation
The company delivered 20,544 vehicles in May. In terms of power exchange systems, recently, NIO Energy Investment (Hubei) Co., Ltd., a subsidiary of the company, revealed that it has received a strategic investment of 1.5 billion yuan from the Wuhan Guangchuang Fund1, and plans to increase related technology research and development, as well as the layout development of charging and switching infrastructure.
reviews
Delivery volume reached a record high in May, and Baas rent adjustments and some concessions formed strong support. The company delivered 20,544 vehicles in May, +233.8% year over year and +31.5% month over month. On March 14, the company announced a new BaaS policy. The standard monthly rent for battery life was reduced to 728 yuan (previously 980 yuan/month), the monthly rent for long battery life was reduced to 1,128 yuan (originally 1,680 yuan/month), and the monthly battery guarantee fee of 80 yuan was abolished. In addition, users who purchased cars before May 31 can also enjoy the “rent 4 get 1 free” discount, further reducing the actual payment costs for users and leading to continued growth in order and sales. We expect the company's gross margin to remain at the level of 10-15% in the first quarter, and deliveries in the second quarter can be expected to exceed 20,000 vehicles for two consecutive months from May to June.
NIO Power's financing continues to expand, Baas results exceed expectations, and the business model is more clear. Recently, the company has successively signed strategic cooperation agreements for power exchange business with a number of car companies, and announced on May 31 that its subsidiary NIO Energy has received 1.5 billion yuan of strategic financing from the Wuhan Guangchuang Fund. BaaS provides a vehicle electricity separation model, lowers the threshold for car purchases, and provides users with more energy supplementation options. In addition, the company further lowered the BaaS starting price in March to cope with fierce competition in the industry. We believe that with battery life cycle management, the company can reduce technology, operation and maintenance costs, and support diversified pricing strategies without affecting profits. Based on Nio Power's financing advantages recognized by investors, we expect other businesses with quarterly losses on the operating side to narrow slightly in the future. Overall, the business model of the company's charging and switching business is clear.
NIO is expected to stabilize its base sales, and Ledao will open mass market growth. Recently, the company officially launched the Ledao brand and entered the mainstream home user market. The pre-sale price of the first SUV Ledao L60 starts at 219,900 yuan, which is expected to bring incremental contributions through the cost performance route. At the same time, the BaaS solution is expected to become the core differentiating competitiveness of LEDO into the 200,000 yuan price range. In terms of the main brand, the company has accumulated deep technology, and is expected to stabilize sales through mass production of technology. At the end of April, it will iterate the global pilot assist NOP+ function to enhance lane centering assistance and acceleration suppression assistance in all scenarios with excellent performance. Looking ahead 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 within 2024.
Profit forecasting and valuation
The current US and Hong Kong stock prices correspond to 0.9x EV/Rev in 2024, keeping the 2024/25 deduction for nonprofit unchanged, and remaining outperforming the industry. Maintaining the target price of HK$62/$8 for Hong Kong and US stocks, all corresponding to 1.4x EV/REV in 2024. Hong Kong stocks and US stocks have an upward margin of 51.4%/48.4%, respectively, compared to current stock prices.
risks
Demand fell short of expectations due to increased competition in the market, and cost control and power exchange cooperation fell short of expectations.