NIO: Buy This Chinese EV Manufacturer While It's Still Cheap

seekingalpha2021-06-11

Summary NIO is a dominant EV manufacturer in the electric SUV segment in China. Despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers ...

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Comments

Hkh
2022-07-03
Hkh
Ok
Favoured
2021-07-10
Favoured
Concern is it is a Chinese stock listed in theUS [Smug]
tigernaut
2021-06-26
tigernaut
?
DerekC
2021-06-25
DerekC
Nice
龙䒜䒜
2021-06-23
龙䒜䒜
?
PhilipGoh
2021-06-23
PhilipGoh
Yes buy [微笑]

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The company mostly spec","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NIO":"蔚来"},"translate_title":"蔚来：趁这家中国电动汽车制造商还便宜的时候买下它","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NIO":0.9},"content_text":"Summary\n\nNIO is a dominant EV manufacturer in the electric SUV segment in China.\nDespite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla.\nAs the Chinese EV market will continue to aggressively expand in the upcoming years, we believe that NIO has all the chances to create additional shareholder value in the future.\n\nNIO(NYSE:NIO)is a dominant EV manufacturer in the electric SUV segment in China. It has been constantly increasing its deliveries every quarter, its revenues have been growing at a triple-digit rate in recent years, and despite competing in the luxurious SUV segment, its cars are more affordable in comparison to the cars of its peers such as Tesla(NASDAQ:TSLA). While NIO's stock has depreciated last month, there's every reason to believe that its growth story is far from over, as the Chinese EV market will continue to aggressively expand in the upcoming years and the penetration of electric vehicles on its roads is only going to increase. Considering this, the company has all the chances to create additional shareholder value in the long run.\nDominating the Chinese Market\nFounded in 2014, NIO is an electric vehicle manufacturer that's headquartered in Shanghai, China. The company mostly specializes in the development of luxurious electric SUVs and just likeXPeng(XPEV), it manufactures and sells its cars online and through its showrooms across China. In addition, NIO also offers various energy-related solutions such as home charging stations, mobile charging services, and others to its customers.\nIn recent years, the company has been aggressively growing, as the deliveries of its cars have been steadily increasing quarter after quarter, which led to the appreciation of its stock. However, due to the overall market selloff last month, NIO's stock along with stocks of other EV manufacturers such as XPeng, Tesla, and Li Auto (LI) evaporated most of its YTD gains and are currently underperforming the S&P 500 Index.\n\nChart: Seeking Alpha\nDespite this, there's every reason to believe that NIO's stock will recover, as the company's successful performance in Q1 shows that its growth story is far from over. InQ1alone NIO beat the Street expectations by $160 million and generated $1.22 billion in revenues, which represents an increase of 481.8% Y/Y. In addition, the company's gross profit was $237.3 million, while its vehicle margin was 21.2% against -7.4% a year ago. During the period, NIO has also improved its bottom-line performance, as its net loss was only $68.8 million, and despite the chip shortages and the Chinese New Year its deliveries have also increased by 422.7% Y/Y and by 15.6% Q/Q to 20,060.\nOne of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1stoodat $7.2 billion, while it had only $1.59 billion in long-term debt. As a result, it can easily reinvest its resources back into the business to drive growth and establish an even stronger foothold in its home market without worrying too much about the current losses.\nOn top of that, while some might say that by trading at a price-to-salesratioof ~13x NIO is overvalued, the reality is that its momentum is not slowing down and there's every reason to believe that the growth story is far from over. Considering that even at the market cap of ~$70 billion NIO still trades below the Streetconsensusprice of $59.24 per share, it's safe to assume that the upside is still there, especially since the current forecasts suggest that the company will increase its revenues from $2.49 billion in FY20 to $8.81 billion in FY22.\n\nSource: Seeking Alpha\nAt this stage, the major competitor of NIO's flagship SUVES8is Tesla's Model X. However, there are several reasons to believe that the ES8 is a more attractive car in comparison to the Model X, and as a result, NIO has all the opportunities to outsell its competitor in China in the long run. First of all, the ES8 has more legroom and headroom than the Model X, it also has a luxurious interior, and it comes with three different battery packages that could last from 415 kilometers to 580 kilometers on a single charge.\nAll of the ES8 SUVs include a proprietary operating system, have advanced navigation software, and most importantly cost ~$70,000 per vehicle in China, which is below the cost of Tesla's Model X, which comes at a price tag of ~$110,000 per vehicle in the region. We believe that this pricing advantage will undoubtedly help NIO to outsell Tesla in the SUV segment, especially since its cars now could bepurchasedat a discount thanks to the new Chinese subsidy program.\nAnother uniqueness of NIO is its battery as a service business model, which allows its customers to swap their batteries in various swapping stations around China if they don't want to charge their cars or are in a hurry. After recently deploying the second version of its Power Swap stations, the swapping of batteries is now done in under three minutes, which is the same as refueling a traditional ICE car, and a single station now could perform up to 312 battery swaps in a single day. NIO now has a network of charging stations across all of China and if the solid-state batteries won't be available by the end of the decade at scale, then the idea of swapping batteries on the go will remain a viable business model in the long run.\nGoing forward, NIO plans to accelerate its deliveries this month in order to meet its Q2 goal of delivering 21,000 to 22,000 vehicles, which represents a growth of 103% Y/Y to 113% Y/Y and plans to generate $1.24 to $1.29 billion in revenues during the period. Despite the semiconductor shortages, NIO already managed to increase its deliveries in April and May to 7,102 vehicles and 6,711 vehicles, respectively, which represents a growth of 125% Y/Y and 95.3% Y/Y, respectively. On top of that, NIO is also on track to deliver 90,000 to 100,000 vehicles this year.\nConsidering this, there's every reason to believe that NIO will continue to be a dominant player in the Chinese EV market and a leader of the luxury EV segment in the region. While the company doesn't have an infrastructure outside China, we don't think that's a downside at all since China is the biggest EV market in the world that's constantly growing and NIO has better chances of creating shareholder value there than abroad. For that reason, we believe that NIO's growth story is far from over and it's likely that as long as its deliveries increase with every quarter, its stock will be rising in value in the long run.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9044408646,"gmtCreate":1656806158385,"gmtModify":1676535895180,"author":{"id":"3581394154076658","authorId":"3581394154076658","name":"Hkh","avatar":"https://static.tigerbbs.com/43be312bb9a7937890db2b30b590158c","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3581394154076658","authorIdStr":"3581394154076658"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9044408646","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":141521401,"gmtCreate":1625881586603,"gmtModify":1703750326281,"author":{"id":"3586827056982923","authorId":"3586827056982923","name":"Favoured","avatar":"https://static.tigerbbs.com/4d38d74cfeefcb4ca6bbe28947b8d79f","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586827056982923","authorIdStr":"3586827056982923"},"htmlText":"Concern is it is a Chinese stock listed in theUS [Smug]&nbsp;","listText":"Concern is it is a Chinese stock listed in theUS [Smug]&nbsp;","text":"Concern is it is a Chinese stock listed in theUS [Smug]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/141521401","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":124019704,"gmtCreate":1624705777708,"gmtModify":1703843927805,"author":{"id":"3567239827558758","authorId":"3567239827558758","name":"tigernaut","avatar":"https://static.tigerbbs.com/66e331c670eb88443b88c6bdb76224cf","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":3,"crmLevelSwitch":1,"idStr":"3567239827558758","authorIdStr":"3567239827558758"},"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/124019704","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":122514995,"gmtCreate":1624627843317,"gmtModify":1703842084201,"author":{"id":"3574891778837790","authorId":"3574891778837790","name":"DerekC","avatar":"https://static.tigerbbs.com/02824f1a06daf256b2ea13cc9eba6e85","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3574891778837790","authorIdStr":"3574891778837790"},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/122514995","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":121658550,"gmtCreate":1624463035970,"gmtModify":1703837605831,"author":{"id":"3586911607763655","authorId":"3586911607763655","name":"龙䒜䒜","avatar":"https://static.tigerbbs.com/2b15380a0d5d5e4dbe508f7c2a1c47c1","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586911607763655","authorIdStr":"3586911607763655"},"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/121658550","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":123396601,"gmtCreate":1624408362703,"gmtModify":1703835681329,"author":{"id":"3574730309796268","authorId":"3574730309796268","name":"PhilipGoh","avatar":"https://static.tigerbbs.com/d6085185a57dcb9a222e871338387428","vip":1,"hat":"https://static.tigerbbs.com/f84d87792f02cf78e80ee34979fd31e5","crmLevel":7,"crmLevelSwitch":1,"idStr":"3574730309796268","authorIdStr":"3574730309796268"},"htmlText":"Yes buy&nbsp;[微笑]&nbsp;","listText":"Yes buy&nbsp;[微笑]&nbsp;","text":"Yes buy [微笑]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/123396601","repostId":1146386859,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":418,"commentSize":309,"repostSize":0,"favoriteSize":23,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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