NIO Inc. (NIO US) Company Update Summary
Core Content Overview
NIO Inc. (NIO US) reported its 1Q22 earnings, which slightly missed expectations primarily due to lower gross profit margins. The company's 2Q22 sales guidance of 23,000-25,000 units indicates a potential rebound in production and sales, especially with the commencement of the second plant's ET5 production in 3Q22. This guidance is seen as a positive signal for the second half of 2022. However, management expects 2Q22 GPM to be under pressure due to rising battery costs.
Key Financial Highlights
Earnings Summary (YE 31 Dec)
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Revenue (RMB mn) |
16,258 |
36,136 |
56,464 |
101,595 |
127,965 |
| YoY growth (%) |
107.8 |
122.3 |
56.3 |
79.9 |
26.0 |
| Net profit (RMB mn) |
(5,611) |
(10,572) |
(8,531) |
(3,270) |
(483) |
| EPS (RMB) |
(4.74) |
(6.72) |
(5.10) |
(1.93) |
(0.28) |
| P/S (x) |
9.7 |
5.6 |
4.0 |
2.3 |
1.8 |
| P/B (x) |
5.8 |
5.9 |
7.6 |
8.0 |
7.5 |
| Gross margin (%) |
11.5 |
18.9 |
16.7 |
19.0 |
18.8 |
| Net margin (%) |
(34.5) |
(29.3) |
(15.1) |
(3.2) |
(0.4) |
1Q22 Performance
- Revenue: Slightly below estimates due to worse product mix.
- Gross Profit Margin (GPM): 14.6% (down 2.8 ppts QoQ).
- Net Loss: In line with estimates, driven by lower R&D and higher other income.
- Sales Volume: 25,768 units (up 2.9% QoQ, up 28.5% YoY).
2Q22 Guidance
- Sales Guidance: 23,000-25,000 units, implying monthly sales of 11,000-13,000 units in June 2022.
- GPM Outlook: Expected to be under pressure due to rising battery costs.
- Production: The second plant will start producing the ET5 in 3Q22, potentially increasing monthly capacity.
Revised FY22E Forecasts
- Revenue Cut: From 66,596 to 56,464 RMB mn (15% reduction).
- GPM Projection: Revised to 16.7% for FY22E.
- Net Loss Forecast: Raised by RMB 300 mn to RMB 8,531 mn.
Analyst Ratings and Target Price
- Rating: Maintain BUY.
- Target Price: US$35.00 (down from US$45.00).
- Price Performance:
- 1-month: +50.4%
- 3-month: +13.3%
- 6-month: -41.9%
Key Risks
- Slower progress in autonomous driving technology.
- Lower-than-expected sales volume for new models.
- Sector-wide de-rating.
Shareholding Structure
| Shareholder |
Ownership (%) |
| Li Bin |
10.5% |
| Tencent entities |
9.8% |
| Others |
79.7% |
Financial Summary
Income Statement
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Revenue |
16,258 |
36,136 |
56,464 |
101,595 |
127,965 |
| Cost of sales |
(14,385) |
(29,315) |
(47,009) |
(82,310) |
(103,895) |
| Gross profit |
1,873 |
6,821 |
9,455 |
19,285 |
24,069 |
| Net profit |
(5,611) |
(10,572) |
(8,531) |
(3,270) |
(483) |
Cash Flow
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Net cash from operating |
1,951 |
1,966 |
(617) |
8,857 |
11,309 |
| Net cash from investing |
(5,071) |
(39,765) |
6,557 |
(6,501) |
(7,501) |
| Net cash from financing |
41,357 |
18,129 |
(5,250) |
(2,058) |
1,100 |
Balance Sheet
| Metric |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Total assets |
54,642 |
82,884 |
78,747 |
91,159 |
105,228 |
| Total liabilities |
22,780 |
44,820 |
45,487 |
62,319 |
74,314 |
| Shareholders' equity |
27,169 |
34,710 |
29,861 |
28,772 |
30,849 |
Key Ratios
| Ratio |
FY20A |
FY21A |
FY22E |
FY23E |
FY24E |
| Gross margin (%) |
11.5 |
18.9 |
16.7 |
19.0 |
18.8 |
| Operating margin (%) |
(28.3) |
(12.4) |
(16.9) |
(4.1) |
(1.1) |
| Net profit margin (%) |
(34.5) |
(29.3) |
(15.1) |
(3.2) |
(0.4) |
| Net cash/total equity (x) |
1.1 |
1.0 |
1.0 |
1.2 |
1.3 |
| Current ratio (x) |
3.3 |
2.2 |
1.9 |
1.5 |
1.3 |
| ROE (%) |
(53.8) |
(34.2) |
(26.4) |
(11.2) |
(1.6) |
Investment Recommendation
- Rating: BUY
- Target Price: US$35.00 (down from US$45.00)
- Current Price: US$20.38
- Up/Downside: +71.7%
Key Viewpoints
- The 1Q22 slight miss is attributed to lower GPM, not revenue.
- 2Q22 guidance signals improved production and sales in 3Q22.
- Management's GPM under pressure in 2Q22 may present a buying opportunity.
- The company is expected to maintain a 19% GPM for FY22E.
- Reduced revenue and GPM forecasts reflect the impact of supply chain issues and battery cost increases.
- The revised net loss forecast is based on lower sales volume and higher operating losses from power swap stations.
Conclusion
NIO Inc. faces short-term margin pressures but has strong long-term growth potential. The 2Q22 guidance suggests a recovery in production and sales, which could drive performance in 3Q22 and beyond. Despite the challenges, the analyst maintains a BUY rating, adjusting the target price to reflect updated forecasts. Key risks include autonomous driving progress, new model sales, and sector-wide market conditions.
