Nio Earnings: Delivery Guidance Missed

Despite a sequential recovery in vehicle margins, we have reduced our fair value estimate.

Morningstar 30 August, 2023 | 16:01
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NIO Stock at a Glance


NIO Earnings Update

Nio (NIO, 09866)’s second-quarter revenue was at the low end of its guidance. Vehicle margins declined 10.4 percentage points year over year to 6.2% due to product mix change and promotions on older models. In addition, delivery guidance for the third quarter missed market expectations. With lower vehicle margins and rising operating expense ratios assumptions, we increase our net loss forecast for 2023-24 and delay our breakeven year forecast to 2026.

We have reduced our fair value estimate to US$ 13.30 per ADS (HK$ 103 per share) from US$ 14.00 per ADS (HK$ 108 per share). Our fair value implies a forward 2024 price/sales ratio of 1.9 times.

For the third quarter, management guided vehicle delivery to grow 74%-80% year over year to 55,000-57,000 units and total revenue to increase 45%-50% year over year to CNY 18.9 billion-CNY 19.5 billion. The midpoint of guidance implies monthly delivery to be around 17,500-18,000 units for August and September, which we believe is below market expectation of 20,000 units per month. Management also commented during the briefing that they expect monthly sales to pick up to at least 20,000 units in the fourth quarter with ES6, EC6, ET5, and ET5T contributing most of the volume.

Despite the near-term margin pressure, we expect vehicle margin to record sequential recovery in the second half as economies of scale kick in and with the decline in battery cost. Management indicated that vehicle margin will improve to double digits in the third quarter and to around 15% in the fourth quarter. We maintain our positive view as Nio enters a strong model cycle with improving sales momentum driven by new models.

- Vincent Sun, equity analyst at Morningstar

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
NIO Inc Class A36.95 HKD-0.54Rating

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