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NIO This autumn 2021 earnings preview

Nio plans to start deliveries of its ET7 electrical sedan in 2022.

Evelyn Cheng | CNBC

Nio‘s glossy and highly effective electrical autos have captured the eye of buyers – and rival automakers – around the globe, however they have not at all times been in a position to energy previous the supply-chain disruptions which have performed havoc with the Chinese language firm’s formidable sales-growth plans.

Wall Road analysts on Thursday will possible ask Nio’s senior management some robust questions on how these supply-chain points, and the current fast worth will increase affecting key commodities like nickel, are more likely to play out in coming months. The automaker studies its fourth-quarter earnings after the U.S. markets shut. An earnings webcast is scheduled to start at 9 p.m. ET.

As soon as among the many meme-stock excessive flyers, Nio’s American depositary shares have had a tough time over the previous a number of months as relations between the U.S. and China have cooled.

Nio’s earnings report itself is not more likely to maintain numerous surprises. The corporate delivered simply over 25,000 autos within the quarter, close to the high end of its guidance vary (23,500 to 25,500). Buyers can be listening for updates on Nio’s efforts to broaden its seller community in China and to start gross sales in a number of new European markets.

They may also be searching for particulars on Nio’s plans to broaden the community of battery-swap stations which might be the spine of the corporate’s revolutionary gross sales mannequin. Consumers can decide to buy a Nio with out a battery pack, at a considerable low cost, in the event that they subscribe to its battery-swap service.

Nio is not broadly coated by U.S. banks, however the 4 Wall Road analysts who answered a Refinitiv survey count on Nio to publish a lack of 2.97 Chinese language yuan ($0.47) per share, on common. Eight analysts stated they count on Nio to report income of 8.682 billion yuan ($1.36 billion), on common.

Provide chains and outlook

These analysts will possible have some questions across the fourth quarter’s prices and margins, however the actual story will in all probability be within the firm’s steerage for the present quarter and the total yr.

Nio, like many different automakers, was pressured to scale back manufacturing at instances in 2021 as a result of supply-chain disruptions, together with a worldwide scarcity of the forms of semiconductor chips utilized in autos. In current months Nio has been in a position to work round these supply-chain points and keep a manufacturing charge between 10,000 and 11,000 autos a month. (Deliveries dipped beneath that stage in February, to only 6,131, due to manufacturing unit downtime round China’s Lunar New Yr celebrations.)

Deutsche Financial institution analyst Edison Yu watches Nio and its key home opponents intently. In a March 20 be aware, he disregarded supply-chain worries and stated that he expects the corporate’s manufacturing output to rise considerably over the subsequent a number of months.

“We see the [manufacturing] run-rate rising to fifteen,000-20,000 per thirty days by June,” Yu wrote. After that, he believes, a brand new manufacturing unit – anticipated to be up and operating within the fall — will assist the corporate ramp up its manufacturing output to 30,000 per thirty days by someday within the first half of 2023.

Assuming it performs out that means, that gross sales progress will get a lift from the three new fashions that Nio is anticipated to launch in 2022, two sedans and an SUV. Manufacturing of the bigger of the 2 sedans, a tech-packed mannequin known as the ET7, started on Thursday morning, Nio introduced in a WeChat post.  

Yu thinks that rising uncooked materials prices will put strain on Nio’s margins over not less than the subsequent few months, however he notes that the corporate has a plan to deal with that through the use of lower-cost lithium iron phosphate, or LFP, batteries in its standard-range fashions.

Yu stays bullish on Nio with a purchase score and a worth goal of $50.

Morgan Stanley analyst Tim Hsiao can be nonetheless bullish on Nio, however he lower his financial institution’s worth goal to $34 from $66 in a Tuesday be aware, reflecting the inventory’s current slide. Hsiao wrote that “elevating macro headwinds and extreme provide challenges” will make the close to time period difficult for Nio, however he feels that its “superior liquidity and income visibility” have it well-positioned to journey out any financial downturn.

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