NIO Inc - CGSI Research 2024-03-06: Introducing Two Sub-brands To Boost Sales

• NIO (SGX:NIO)'s adjusted net loss (non-GAAP) in 4Q23 widened q-o-q to RMB4.95bn (vs. RMB3.95bn in 3Q23), 25% lower than our estimate due to
  1. lower electric vehicle (EV) ASP, and
  2. higher R&D expenses despite improved vehicle margins.
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• EV profit margin widened 0.9% pt q-o-q (+5.1% points y-o-y) to 11.9% in 4Q23, owing primarily to lower battery costs.
• R&D expenses increased to RMB4.0bn in 4Q23 (from RMB3.6bn in 3Q23) due to investments in its new two sub-brands: Alps and Firefly.

FY23 net loss widened

• Overall FY23 revenue increased 13% y-o-y to RMB55.6bn, with EV deliveries up 31% and EV ASP down 17%.
• NIO's adjusted net loss widened to RMB18.5bn in FY23 (vs. -Rmb12.2bn in FY22), driven by a 5% drop in gross profit margin (poor EV sales in 1H23) and a 24% rise in SG&A expenses.

EV deliveries to accelerate in 2H24F on Alps sub-brand launch

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• We anticipate NIO to focus on clearing its legacy models. We expect NIO’s EV deliveries to recover to ~50k and EV margins to improve to ~13% in 2Q24F, supported by the refreshed models developed on its upgraded to NT 2.0 platform which has lower production costs.
• NIO will introduce a second brand, Alps, for its mass market family sedans in 2Q24. We believe Alps should be a key EV volume driver for NIO in 2H24F due to its affordable price.

We cut our FY24-25F EV delivery forecasts due to intensified competition in the mass market.

• Read more at SGinvestors.io.

Ray KWOK CGS International Research | https://itrade.cgsi.com.sg 2024-03-06 SGinvestors.io

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