Nio has risen more than 1,000 percent this year, but Daiwa Capital thinks the stock has not yet peaked, giving it a "buy" rating and a $59 price target in a recent report.
According to analyst Kelvin Lau, Nio is targeting the high-end of the new energy vehicle market, taking similar steps to Tesla. Competition in this segment is less intense and customers are more willing to pay for smart car technology and after-sales service.
Lau said Nio's ES6, to be launched in mid-2020, has demonstrated the company's ability to compete with models from international brands such as Tesla, even if its price is 100,000 yuan higher than Tesla's Model 3.
The analyst said that although Tesla plans to launch the Model Y in China next year, it will compete more directly with the Nio ES6, but believes the ES6 can maintain good sales with its after-sales services, including battery swap, mobile charging and repair services.
According to the November vehicle delivery data released by Nio, a total of 36,700 vehicles were delivered from January to November this year, up 111% year-on-year, making it one of the top 10 best-selling new energy vehicle manufacturers in China.
Considering the strong demand for luxury cars in China, the surge in pure EV sales and Nio's innovations (Nio Pilot, NOMI), Lau believes this growth rate will continue.
Lau expects Nio sales to increase to 140,000 units in 2023 from 43,000 units in 2020, representing a CAGR of 48% from 2020-2023.
He expects the company's gross margin to increase to 20% in 2023 from 11% in 2020, as pure electric vehicle sales are accelerating.
Nio shares jumped more than 6 percent to $43.50 on Tuesday. The stock rose another 1 percent before the bell on Wednesday.
