"Going into year-end, we see several potential positive developments for Nio," said Deutsche Bank analyst Edison Yu.
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Nio (NYSE: NIO) is expected to see a series of positive developments going into year-end, judging from recent hints from its management and the latest developments. In Deutsche Bank's view, these are well worth noting in the short term.
"Going into year-end, we see several potential positive developments for Nio," said Edison Yu, an analyst at Deutsche Bank, in a research note sent to investors today.
Yu listed three key areas:
First, while the weekly registration data so far in Dec has been soft, we believe delivery volume will ramp up considerably over the remainder of the month.
Management indicated that it produced the 300,000th vehicle on Monday and that this vehicle would be delivered in 2-3 weeks.
Considering cumulative deliveries were 274,000 exiting Nov, this suggests production is ramping up nicely and 4Q guidance is very much achievable (43,000-48,000 units).
Second, the company will be hosting its annual "Nio Day" event on 12/24 where it will unveil two new models. We expect these to be the revamped ES8 and EC7 SUVs which will replace existing first-gen models and be well received by consumers.
Third, we anticipate further encouraging news related to the China COVID re-open (e.g., further relaxation on travel movement) helping sentiment and potentially a final resolution from the US PCAOB on the audit standards for China-based companies listed in the US.
Until Nio's December delivery figures are released, weekly updates of insurance registration data could signal an uptick, Yu said.
However, Yu also noted that the main risk to these short-term views is that Nio runs into operational issues and is unable to deliver vehicles in a timely manner.
There is also a risk that market sentiment toward Chinese stocks could be adversely affected by Covid-related developments and a negative resolution by the US Public Company Accounting Oversight Board (PCAOB), according to Yu.
On December 12, Nio co-founder and president Qin Lihong said in a year-end media briefing that Nio will launch two models on Nio Day 2022, one of which is the ES8 based on the NT 2.0 platform and the other is a very stylish new model.
The Nio App showed a shorter ET5 wait time in its December 13 vehicle information update and stopped showing the wait time for the EC6, implying the company may be phasing out the coupe SUV.
In terms of deliveries, Qin said at the time that Nio's 300,000th vehicle was on track for delivery around January 1. That means the company may deliver about 26,000 vehicles in December, considering its cumulative deliveries stood at 273,741 units as of the end of November.
It is worth noting that Nio vehicles registered 3,141 and 2,982 insurance units in the first two weeks of December, respectively. For the company to achieve its current target, it means that insurance registrations of its vehicles are expected to rise significantly in the next few weeks.
