Company NIO reported a record number of deliveries in China last month amid rising demand for electric vehicles in the country. Analysts raise estimates and say the high long-term growth prospects for the company, indicating the choice of NIO stock a large pension Fund.
Shares of Chinese electric car Nio Inc. (NIO), an increase of almost 730% since the beginning of the year rose 9% on Monday amid reports of a record supply.
The recent jump in the stock market valuation of Nio has reached almost $47,5 billion, compared to larger, more traditional automakers Ford Motor (F) to $30,8 billion and General Motors (GM) $50 billion currently, the market capitalization of the leading electric car manufacturer Tesla (TSLA) is about $402 billion.
Company NIO has reported that in October 2020, the number of deliveries of its electric cars amounted to 5055 units – an increase of more than double compared to last year.
Among 5055 set of units, 53% were in five-seat SUV model ES6 in the amount of 2695 units, 29% were 6-seater and 7-seater version of the ES8 in the total number of 1477 units and 883 units of premium SUV-coupe CE6. SUV CE6 was announced in December 2019, and its delivery began in September 2020.
Earlier in September, the supply of Nio increased by 133% to 4 708 units, and growth for the entire 3rd quarter was 154%: 12 206 units.
The NIO reported that for the period from the beginning of the year to the end of October 31 has sold 430 units of its electric cars and expects total shipments in 2020 will increase by 111.4 percent compared to the figure of 2019.
NIO follows the trends of growth of electric car sales in China
The news of a record supply of NIO followed after strong results from other Chinese manufacturers of electric vehicles, as car sales in China continue to recover.
The Chinese government wants to 2025 cars on new sources of energy was not less than 15% of the market.
Two Chinese electric vehicle startup Xpeng (XPEV) and Auto Li (LI) reported a jump in sales in October, the company BYD in recent months, also increased sales in China.
Xpeng, which became public in the summer, on Monday reported an increase in deliveries of its electric cars in October at 229% to 3040 units 2104 units of which is a sedan P7, competing against the Model 3 from Tesla. According to Xpeng, since its supply increased by 64% to 17 117.
Previously, Li Auto, which started mass production in November 2019, reported an increase in the supply of his SUV One in October to 3 692 8 units and 660 units for the quarter.
All of these companies, including NIO, are positioned as competitors to the Tesla, which is preparing to start production crossover Model Y at its plant in Shanghai, after increasing the output of their Model 3 with a greater range of stroke.
Tesla did not disclose the number of deliveries by region, but for the 3rd quarter reported record total of 145 036 units. According to reports of analytical agencies, in the first half of 2020, the number of registrations of Tesla in China has exceeded 50 000 units. At the same time, according to the latest Chinese news agencies, despite several price cuts, sales of Tesla in China over the past few months has decreased. Tesla recently started to export to Europe Model 3, made in China.
The financial side
Nio plans to publish financial results for the third quarter of 2020 on November 17. His report will precede the report: Li Auto November 13, Xpeng Motors 12 November and Kandi 9 Nov.
In the report for the second quarter of Nio surpassed the Wall Street forecasts, showing revenue growth of 147% to $526,4 million, and for the first time reported a positive gross margin 8.4%
From next quarter, analysts expect Nio: loss of $0.15 per share compared to a net loss of $0.33 a year ago. It is expected that sales will increase by 144%.
Analysts expect Nio will reduce losses by 55% to $0.69 per share throughout 2020 and then to reduce the losses up to $0.49 per share in 2021. It is expected that revenues will almost double in 2020 and 2021.
The analysts about company NIO
In recent months, shares of NIO received a number of increases in ratings and target prices from analysts and now have 6 ratings to “buy”, 3 rating of “hold” and 1 a rating of “sell”.
JP Morgan analyst Nick Lai last week raised the rating of the shares in NIO from “neutral” to “superior” (worse than “buy” but better than “hold”) and almost tripled its target price to maximum on Wall Street (potential growth of 31% from current levels).
“In the Chinese market of smart electric vehicles, we expect Nio will be a long-term winner in the premium segment among Chinese brands”, – explained his position the analyst.
Lai added: “We came to the conclusion that Nio is expected to dominate at ~ 30% market share of passenger electric cars premium and make deliveries to 334 thousand units by 2025”.
Earlier in October, Deutsche Bank analyst predicted a record number of deliveries for Nio in the third and fourth quarters of the year 2020.
Goldman analyst FEI Fang, in turn, wrote that after the pandemic the NIO has provided financing and received a cash infusion that “to a large extent eliminate any liquidity risk for the company in the period from now until expected break even in 2022.”
Barrons analysts also noted that the shares of the NIO recently become the choice of the largest state pension Fund of new Jersey, who sold shares of Apple (AAPL) and Intel (INTC) in exchange for acquiring shares of NIO and Zoom Video Communications (ZM).
