NIO Inc. - CGS-CIMB Research 2022-11-10: Net Loss Widens In 3Q; Competition Will Be The Key Challenge

NIO Inc. - Net Loss Widens In 3Q; Competition Will Be The Key Challenge

  • NIO (SGX:NIO)’s 3Q22 revenue rose 26% q-o-q (+33% y-o-y) to RMB13bn, driven by a 26% q-o-q (+29% y-o-y) increase in EV deliveries (31.6k units). Net loss (non-GAAP) widened to RMB3.46bn (vs. net loss of RMB2.19bn in 2Q22) due to a large jump in R&D expenses and marketing expenses. R&D expenses rose 37% q-o-q (+145% y-o-y) to RMB2.9bn ahead of three new model launches, based on the new platform 2.0, in China and EU. Vehicle margins narrowed 0.3% pt q-o-q (-1.6% points y-o-y) on rising battery costs due to surging lithium price.
  • NIO's 9M22 net loss was RMB8.51bn, higher than our previous FY22F forecast due to weaker-than-expected EV deliveries and vehicle margins, no thanks to production suspension in the Hefei factory in 3Q amid COVID-19 lockdowns, and increased battery costs.
  • NIO guides EV shipments of 43k-48k units in 4Q22F, representing increases of 36-52% q-o-q, on the back of three new model launches (the ET5, ET7 and ES7) but sees challenges from continued COVID-19 production disruptions in the Hefei factory.
  • Our channel checks found that demand for the ET5 remains strong. We estimate that NIO’s 4Q EV shipments will reach 45k units (+42% q-o-q), led by sedan ET5, although demand could be impacted by rising competition in the premium segment. We cut our FY22F/23F/24F EV shipments by 18%/14%/12% as we cut 5k units in Nov 2022 due to
    1. the production halt in the Hefei factory,
    2. weak consumer demand for its legacy models, and
    3. rising competition in the premium segment (Tesla’s price cut recently and XPeng’s and Li Auto’s new premium model launches).
  • We now estimate NIO delivering 128k/247k/323k units in FY22F/23F/ 24F, with annual growth rates of +40%/+93%/+31%, which still significantly outpaces China’s NEV shipments growth of +29%/+36%/+47%, respectively. We increase our FY22F/23F LPS forecasts by 74%/207% and cut our FY24F EPS forecast by 67% due to lower EV shipment and vehicle margin assumptions.
  • Nevertheless, we expect sustained vehicle margin improvements in FY23F and FY24F due to the new platform (NIO Technology 2.0) launches, which should boost EV shipments and enhance manufacturing efficiency.
  • We lower our DCF-based target price for NIO to HK$130.3 as we cut our EPS forecasts and terminal growth rate from 5% to 3% on keener competition and raise risk-free rate from 3.5% to 5.0% to reflect global inflation and uncertainty over China’s economic outlook.
  • We maintain ADD as NIO should capture a greater share of China’s premium EV market due to its strong new models in the pipeline.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

Ray KWOK CGS-CIMB Research | 2022-11-10
SGX Stock Analyst Report ADD MAINTAIN ADD 22.82 DOWN 32.780

Previous report by CGS-CIMB:
2022-09-08 NIO Inc. - Strong Electric Vehicle Delivery In 3Q/4Q On New Models

Relevant links:
NIO Analyst Report,
NIO Target Price,

NIO Share Price History,
NIO Announcements,
NIO Dividends/ Corp Actions,
NIO News Articles


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