Company Analysis
NIO (NIO US/Buy) Ample near-term momentum
> Ample near-term momentum

3Q21 review

Slightly above guidance

• For 3Q21, NIO reported revenue of CNY9.8bn (+117% YoY, +16% QoQ), slightly above guidance (CNY8.9-9.6bn). Gross margin was 20% (+7.4%p YoY, +1.7%p QoQ).

• Electric vehicle (EV) revenue grew to CNY8.6bn (+102% YoY, +9% QoQ), fueled by strong sales volume (24,439 units; +100% YoY, +12% QoQ). Gross margin was 18% (+4%p YoY, -2%p QoQ).

• Other revenue rose to CNY1.17bn (+351% YoY, +118% QoQ) on the back of new energy vehicle (NEV) credit sales and increased demand for battery upgrade services. Gross margin was 36% (+50%p YoY, +43%p QoQ).

• GAAP net loss was CNY2.86bn, and non-GAAP net loss was CNY0.57bn.

Maintain Buy

• 4Q21 guidance: Revenue in the range of CNY9.37bn to CNY10.1bn (+41% to +52% YoY; -4.4% to +3.1% QoQ) and deliveries in the range of 23,500 to 25,500 units (+35% to 47% YoY; -3.8% to +4.3% QoQ)

• October deliveries were weaker than expected, at 3,667 units (-28% YoY), mainly because of production line overhauls/upgrades (Sep. 28-Oct. 15) related to next year’s ET7 launch. Operations returned to normal in late October.

• October orders hit a record high. Still, we believe management issued conservative guidance for 4Q21 deliveries due to the ongoing production disruptions caused by chip shortages. We look for monthly deliveries of over 10,000 units in both November and December.

• The development of NIO Autonomous Driving (NAD) is progressing more rapidly than originally planned. Two new models (excluding the ET7) based on NIO Technology Platform 2.0 are expected to be released in 2H22.

• Competition in the fast-growing Chinese EV market is likely to intensify, but we believe NIO has already established a firm position through differentiated strategies (luxury SUVs, battery swap subscription program, etc.).

• In the near term, we could see momentum arising from NIO Day (the company’s annual technology event; Dec. 18) and sales volume growth following the release of the ET7. We also expect the company to roll out low-end models under its new mass-market brand next year.

• On Nov. 9, NIO’s stock lost 5.9%. This was largely due to worsening sentiment across the sector stemming from Tesla’s sell-off (12%), rather than any concerns about NIO’s growth. We view the stock’s excessive correction as a buying opportunity.

FY (Dec) 2018 2019 2020 2021F 2022F 2023F
Revenue (CNYmn) 4,951 7,825 16,258 36,223 60,045 88,159
OP (CNYmn) -9,596 -11,079 -4,608 -1,865 -1,337 2,802
OP margin (%) -193.8 -141.6 -28.3 -5.1 -2.2 3.2
NP (CNYmn) -23,328 -11,413 -5,611 -6,854 -1,532 2,220
EPS (CNY) -22.74 -11.08 -4.74 -4.38 -0.98 1.42
ROE (%) -287.7 -685.8 -41.5 -21.5 -4.4 5.5
P/E (x) - - - - - -
P/B (x) 1.2 -4.8 2.3 12.8 11.1 9.3
Source: Company data, Mirae Asset Securities Research estimates

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