Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

NIO losses expected to widen on low profitability - China Renaissance

Published 14/11/2022, 17:18
Updated 14/11/2022, 17:18
© Reuters

© Reuters

By Sam Boughedda

Nio Inc (NYSE:NIO) was cut to Hold from Buy, with its price target lowered to $12.30 per share by China Renaissance analysts in a note Monday.

They told investors that NIO's net loss widened on lower GPM and higher expense ratios in the third quarter.

"NIO's 3Q22 revenue rose 32.6% YoY/ 26.3% QoQ to RMB13.0bn, while GPM fell 7.0ppts YoY to 13.3% (+0.3ppt QoQ). In particular, vehicle sales grew 38.2% YoY/ 24.7% QoQ to RMB11.9bn, while segment GPM dropped 1.7ppts YoY/ 0.3ppt QoQ to 16.4% due to higher raw material costs and a change in product mix. Vehicle delivery came in at 31,607 units in 3Q22," wrote the analysts. "We note both delivery and revenue were at the mid-point of management guidance."

The analysts added that despite NIO's five new models in its pipeline for 2023, they see its loss continuing to widen due to the low profitability and high expense ratio.

"In the earnings call, management noted the current capacity crunch is likely to ease in 2023, as it expands the vehicle production capacity of its two plants to 150,000 units per shift. Management guided 4Q22 deliveries at 43,000-48,000 units (+71.8%-91.7% YoY), suggesting full-year 2022 deliveries of 125,000-130,000 units; it expects 4Q22 revenue of RMB17.4bn-19.2bn (+75.4%-94.2% YoY). Meanwhile, management targets to launch five new models in 1H23 (including the upgraded "866" and two brand-new models) to offer a total of eight models. However, we expect NIO's losses to widen given its low profitability and high expense ratio," commented the analysts.

NIO shares are down 1% Monday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.