NIO Inc. announced the 2020Q2 financial report before the market tonight.The overall reaction of the market is very positive, too excellent!

The results gave unexpected surprises, such as gross profit margin, cash flow and other indicators improved significantly more than expected, and the second half of the year guidance is optimistic. NIO Inc. 's share price rose sharply before the trading because of the positive financial results.

1. 2020Q2Comments: break the doubt and establish the long-term growth potential

NIO Inc. 's quarterly report can be summarized as "4.The most "The highest quarterly revenue, the highest gross profit, the lowest loss, and the first operating cash flow. These figures broke many doubts and surprised the market.

2020Q2 NIO Inc. delivered a total of 10331 cars (more than 10,000 in a single quarter for the first time), an increase of 190% over the same period last year. There are many reasons for the outbreak of sales, including the landing of 10 billion yuan of financing, the strong support of the state for power exchange, and NIO Inc. 's excellent product and service reputation.

Sales growth pushed up revenue. NIO Inc. 's second-quarter revenue was 3.72 billion yuan, + 146.5% year-on-year, higher than market expectations of 3.49 billion. The net loss was 1.207 billion yuan, a sharp decrease of 63.6% compared with the same period in 2019, a month-on-month decrease of 29.9%, and far below market expectations of 2.247 billion yuan.

You can seeNIO Inc.2020Q2Revenue reached an all-time high while achieving the lowest loss ever.。

The gross profit margin of 2020Q2 NIO Inc. becomes regular again (for the first time since 2018Q2), in which the gross profit margin of the automobile business is + 9.7%, which greatly exceeds the management guidance of + 5%, and the overall gross profit margin is + 8.4%. Both data are the best in history.

Financial statement interpretationThe sharp improvement in gross profit margin is mainly due to the reduction in the procurement cost of spare parts and the reduction in the cost of manufacturing per unit as a result of the expansion of production and marketing.. As we have mentioned before, the continued growth in sales this year has given NIO Inc. key customer status, which in turn will bring strong bargaining power, especially the battery purchase agreement with Ningde.

In terms of expenses, the R & D expenditure in the second quarter was 545 million, a decrease of 58.1% compared with the same period last year and an increase of 4.4% compared with the same period last year. The report explained that the year-on-year reduction was due to the large R & D and testing expenses incurred before the listing of ES6 in the second quarter of 2019; marketing expenses were 937 million, year-on-year-34.1%, month-on-month + 10.4%.The reduction in marketing expenses compared with the same period last year is mainly due to layoffs and improved operational efficiency.。

Taken together, driven by scale growth, cost reduction and efficiency improvement, NIO Inc. 's financial report has created the most in many history, which can be called a milestone. The above fundamental reversal broke the market doubt and established clearer growth prospects for NIO Inc..

As of 2020Q2, the amount of cash and equivalents plus short-term investment on NIO Inc. 's account was 11.168 billion, mainly because strategic investors injected 5 billion capital into NIO Inc. China, as well as about 2.5 billion capital injected by listed companies. In addition, NIO Inc. also realized operating cash flow for the first time in the second quarter.

Outlook: 2020H2 sales continue to grow, 8Set up a battery company in April

In tonight's conference call, CEO Li Bin gave optimistic guidance for the second half of the year:

1）EC6OrderExceeding expectations, 11000 to 11500 vehicles will be delivered in the third quarter, another record high, with revenue ranging from 40.47 to 4.212 billion.

2）Production capacityReached 4500-5000 units of full supply chain capacity at the end of August and the beginning of September

3) continue to improve operational efficiency and have confidenceThe whole vehicle and comprehensive gross profit margin exceeded in the second half of the year.10%；

4) the product announcement and certification required for the separate sale of complete vehicles and batteries have been completed.Battery assets Corp.It is expected to be completed in August.

5）The first oneBaaSModel vehicleThe verification of insurance, loan, licensing and other processes have been completed.

6）Research and developmentWill increase investment in autopilot technology and establish advantages.

Ningde Times also announced tonight that it is expected to invest no more than 19 billion yuan in upstream and downstream listed companies, which is estimated to be a battery company in cooperation with NIO Inc..

We believe that 2020Q2 is a landmark quarter for NIO Inc., with breakthroughs in delivery volume, gross profit margin, operational efficiency and cash flow.

At the same time, after solving the financing problem, the company has also entered a very good rhythm. On the one hand, it strictly controls costs, while at the same time ensures investment in R & D and service systems. In particular, it joins hands with Ningde to set up a battery assets company. NIO Inc. is expanding his circle of friends, exploring business models together, making the cake bigger, and more importantly, guiding resources to their own favorable direction and seeking to establish competitive advantages.

On one side, Tesla, Inc. opened the way in front, raising the valuation ceiling of the electric vehicle plate, and the market is likely to go further.Give NIO Inc. a more radical valuation.The current NIO Inc. may be like Tesla, Inc. in 2018 and 2019. Based on the huge amount of research and development and large-scale layout in the previous period, every financial report in the future will probably lead to an improvement in financial indicators, and each improvement will promote the stock price.

With NIO Inc. 's car mass production next year, assuming monthly delivery of 7000-8000 units in 2021, the overall gross profit margin is expected to be close to 20%, while the expense rate will be reduced to around 20%, so NIO Inc. may usher in a profit schedule.