Nio Rating Cut to Outperform Amid Slower Growth
CLSA Analysts Downgrade Nio’s Rating
CLSA analysts downgraded Nio’s rating to Outperform, citing sluggish growth reported in the company’s fiscal Q4 2023 results. The brokerage firm also slashed estimates and reduced the target price from $9.8 to $6.
Decline in Revenue and Margins
Nio’s 4Q23 revenue dropped by 10.3% QoQ to Rmb17.1bn, with a net loss increasing by 20.8% QoQ to Rmb5.59bn. The company faced higher unit expenses per vehicle due to a lack of scale, resulting in a larger net loss. However, the vehicle margin showed a slight improvement, increasing by 0.9 percentage points to 11.9%.
Anticipated Launch of Sub-Brand and Network Expansion
CLSA anticipates that Nio’s new sub-brand, Alps, scheduled to launch in the third quarter of 2024, will offer significant cost-performance benefits. Additionally, Nio is focusing on expanding its battery-swapping network, aiming to have over 3,300 swapping stations by the end of the year.
Revenue Forecasts and Stock Performance Adjustment
As a result of the slower growth, CLSA revised down its revenue forecasts for 2024 and 2025 by 23% and 34%, respectively. The firm also updated its net loss projections for the same period. Consequently, the stock saw a 1.5% decline in premarket trading on Wednesday.
