NIO Q3 2022 Investment Note
NIO reports strong third-quarter revenue, whereas higher costs squeeze the margin, bordering on breakeven
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Key Takeaways:
Attitude: NIO delivered 31,607 vehicles in Q3 2022, representing a solid growth of 29.3%YoY. During this quarter, NIO achieved solid top line growth against a challenging environment. To meet the growing user demand and shorten the waiting time, the company has been working closely with supply chain partners to accelerate production and delivery. On October 7, NIO formally introduced its compelling products and service to Europe. NIO aims to consistently enhance the holistic user experience by investing in core technology development and power network expansion, while continuously improving operational execution and efficiency.
Guidance: NIO estimates Q4 revenue to be between $2.4 billion and $2.7 billion, jumping 75.4%-94.2% from a year earlier. The company expects to deliver 43,000-48,000 EVs in Q4, up 71.8%-91.7% from Q4 2021. It would also means there is an increase of 36%-52% from Q3's record deliveries. Specifically, NIO expects the ET5 delivery will support a substantial acceleration of overall revenue growth in next quarter. NIO has full confidence in future performance in Europe.
Product: On September 30, NIO kicked off the delivery of ET5, and the preliminary user satisfaction rate exceeded expectations. The casting supply shortage appears mostly behind and ET5 should at least ramp up close to the original 10,000-unit target in Q4. As to NIO ET7, it won the 2022 Golden Steering Wheel award granted by the Auto Bild, as ET7 was voted the best car in the medium and upper-class category. Moreover, NIO plans to launch five new EV models in the H1 2023. NIO has strong confidence in the competitiveness of new models based on the NT2 platform, which has upgraded multiple times with user experience improvement.
NIO Network: In Q3, NIO introduced its products and services to customers in Europe, marking official market entry in Germany, the Netherlands, Denmark, and Sweden. NIO has established an R&D center in Berlin for the deployment of intelligent digital experience and localized development. For the competitive ecosystem, NIO now has 399 sales and service network in 149 cities, 280 service and delivery centers in 163 cities. In terms of the charging and swapping network, NIO has installed 1,210 power swap stations and provided 14 million battery swaps for customers. Currently, NIO's power map has connected to over 590,000 third-party chargers in China and more than 380,000 chargers in Europe.
Earnings Q&A
Q: How do you see the ET5 order intake since the launch and especially after Tesla launched another wave of price cuts in October? Do you see any impact from there?
William Li: Regarding the ET5 orders, the more important thing for us currently is to find a way to deliver the ET5 and shorten the waiting time for the users. Generally speaking, order is not an issue for us regarding ET5. The demand for ET5 is very strong as we expected.
When it come back to Tesla, Tesla often cuts its prices. So, we don't actually think this affects the users demands regarding new products. If we look at the Model 3, there is a big price gap compared with other products. If we compare Model Y with ES6, we don't actually believe that we are competing in the same segment. So, if we look at the pricing of our product and the positioning of our product, we're not competing with Tesla in the same segment.
Q: How will the U.S. semiconductor-ban impact the development of the industry and also NIO?
William Li: Regarding the Chips Act, I believe that this may affect the chip used for cloud training. Right now, I believe that we have sufficient chips like the A100 to satisfy the need for the AD training in the long run. But at the same time, we are also exploring different opportunities.
For example, where considering working together with some cloud service providers, and we are also evaluating some long-term solutions to support the integration of our AD solutions. As of now, I don't actually see any impact on overall operations.
Q: Regarding the surging SG&A expenses, is that just temporary because NIO has new products launching and new markets in Europe? What's your expectation for the trend going forward?
Stanley Qu: The increase of SG&A in Q3 compared with Q2 is because our sales and service network in China and also since we entered more country markets in Europe in Q3. We have more marketing and promotion activities in Q3 compared with Q2. For the long term, SG&A as a percentage of sales revenue will continue to be optimized along with the improvement of our operation efficiency. I think in 2023 and also the coming years, you will see a stable trend for further improvement. For Europe business, the sales and marketing team is about 500 headcounts. Europe is at quite an initial stage and the expense is not a big percentage of the overall SG&A now.
Q: Would you please give us more information whether NIO will break even in Q4 next year or not?
William Li: For the core business of NIO, we are aiming to achieve breakeven in Q3 2023, and this is our plan. Whereas at the same time, we're also working on different strategic new business. For example, we have two new brands and the battery chipset and the smartphone business in next year. So, if we look at 2023, the investment for those strategic new business is going to be around 3 billion RMB to 4 billion RMB. However, we are still confident of achieving the break-even point for NIO core business in the third to fourth quarter of 2023.
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Disclaimer
This article is a script from the NIO Q3 FY22 earnings conference call. In order to facilitate reading, we have made appropriate cuts and revisions. Comments above are made available for informational purposes only. Before investing, please consult a licensed professional. Moomoo Inc. ("moomoo") provides mobile and online technology solutions for securities trading. Moomoo is not an investment adviser or a broker-dealer and it provides neither investment or financial advice nor securities trading services. All contents such as comments and links posted or shared by users of the community are opinions of the respective authors only and do not reflect the opinions, views, or positions of moomoo, its affiliates, or any employees of moomoo or its affiliates. Please consult a qualified investment or tax advisor for your personal financial planning and tax situations. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC). In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services License (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore. In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.
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steady Pom pipi : It's not on my buying list
LitementYy : Yes ofc ,the China Market is wider and Nio product a high quality car with a average market price
Milk The Cow : $NIO Inc. USD OV (NIO.SG)$/ $NIO Inc (NIO.US)$ is kinda no good due to many of the negativity of the economy.
. But not now any moment due too many negativity in the economy...
=
.
... = rumors about China economy opening back up (I guess maybe in mid of the year 2023 if it's really true 
) + the good US CPI result.
.
.
However, I do think that it got potential
Already knew that it may not do good for the quarter. However, I'm surprised that NIO already start crashing even before the earning released in the way back
Maybe hold for now
Basically, I think that the stock price may get pulled up based on a sentimental thing (the 2 factors mentioned above)
But in term of financial wise,
矜重的比尔 : NIO disclosed its financial report for the third quarter of 2022. Overall, revenue once again exceeded 10 billion dollars and reached 13.02 billion dollars. The year-on-year growth rate reached 32.6%, slightly exceeding expectations, but losses reached 4.111 billion yuan, which also exceeded expectations. Therefore, the NIO problem still lies in the expansion of losses. This is also a problem that new car builders are currently facing, and it is difficult to solve it even in a short period of time. After all, battery costs are there, and NIO's models are basically the most numerous among the new forces. Fortunately, there are still more than 50 billion dollars in cash on the books. This is an advantage that the new forces that have not yet been listed have. If they have not stabilized in the high-end market, and until battery costs are settled, it is estimated that this pain will continue for a long time. Of course, other manufacturers will also be in great pain; it depends on who can survive.
1. In terms of revenue
NIO's third-quarter revenue was 13.002 billion yuan, up 32.6% year on year and 26.4% month on month. Revenue once again hit a new quarterly high. 31,607 cars were delivered in the 3rd quarter, and the unit price reached 370,000, close to double that of Xiaopeng. The growth rate seems good, but we recall the delivery guidelines for 31,000 to 33,000 vehicles proposed by NIO at the second quarter earnings conference. NIO's delivery volume was only barely up to the target. The pressure will be in the fourth quarter, November and December to be exact.
2. Māori side
NIO achieved gross profit of 1,734 billion yuan in the third quarter, a gross profit margin of 13.3%, up 0.3% from the previous quarter, down 7% from the same period last year, and the automobile gross profit margin was 16.4%. It has also been declining in recent quarters. This is mainly related to battery costs. It is also a common problem with pure electric vehicles. Currently, new forces have not been able to solve this problem. If you look at the profits of the Ningde era, you can see how difficult it is for new power manufacturers to solve this problem. This is also difficult to solve in the short term. We can only hope that battery costs will drop later.
3. On the loss side
In the third quarter, NIO's net loss was 4.111 billion yuan, up 392.3% from the third quarter of 2021 and 49.1% from the second quarter of 2022. Excluding equity incentive expenses, the adjusted net loss (non-GAAP) for the third quarter of 2022 was $3,498 million, up 22% from the third quarter of 2021 and 203.8% from the second quarter of 2022. This is also a common problem with the new car builders, and losses are still growing. Even if it used to be ideal to be profitable in a single quarter, it is now a loss. Costs and expenses remain high, and short-term profits are hopeless. Fortunately, NIO has raised quite a bit of money, and there is still more than 50 billion dollars in cash on its books. Now that electric cars are seriously involved, there is no problem that NIO can survive. Those without financing have lower gross margins than NIO are actually even more dangerous.
4. In terms of costs
In the third quarter, NIO spent 5.605 billion dollars, an increase of 87.8% over the previous year. This cost is indeed too high, and it is still growing rapidly. R&D expenses account for 22%, and R&D expenses have increased 146.4%. It can be said that NIO's investment in R&D is still quite large. This is related to NIO's relatively rich models. However, I personally think NIO doesn't want to learn from Xiaopeng; if they don't get through with electric cars, they will make flying vehicles; whatever mobile phone they should give up, give up. NIO's investment in research and development of so many models is enough to sell them for a few years, and the speed of the new cars in the future can slow down a bit.
5. New Energy Vehicle Delivery Guidelines
In terms of delivery volume, in the third quarter of 2022, NIO delivered 31,607 vehicles, while the guideline of 31,000 to 33,000 vehicles was barely completed.
NIO expects delivery of 43,000 to 48,000 vehicles in the fourth quarter of 2022, an increase of about 71.8% to 91.7% over the fourth quarter of 2021; total revenue will be 17.368 billion yuan (US$2,442 million) to 19.225 billion yuan (US$2,703 million), an increase of about 75.4% to 94.2% over the fourth quarter of 2021. Although the guidelines fell short of expectations, it feels like another very challenging figure, because October has already passed, and NIO only delivered 1,059 vehicles, which means that in November and December, it will deliver 3,2947-37941 vehicles, and an average of 16400-18900 vehicles per month. This feels very difficult!
6. epilogue
Looking at NIO's financial report as a whole, it's still a “high growth, high loss” situation. Had it not been for the more than 50 billion dollars of cash lying on the books, I don't think anyone would have been able to bear such huge losses. However, these are also problems faced by other new power manufacturers; the ideal is probably better. Don't look at Nacha's meteoric delivery, but the gross profit and cash flow are estimated to be much worse than NIO's. Xiaopeng just hehe. The monthly delivery volume is only 5,000, so I'm not very pessimistic about NIO.
Now the competition for electric vehicles is focused on electrification. Traditional car companies have an advantage. NIO chose the pure electric model, and there will be a lot of pressure in terms of cost, but the high-end route it follows is the highest of the 370,000 new forces. If the delivery volume can reach the level of 15,000 per month according to the guidelines, I think there is still great hope that it will become high-end after 2-3 years. It is estimated that manufacturers will fall under the pure electricity model in the next 2-3 years, but it must not be NIO. NIO has accumulated so much research and development. Whether it's electrification and intelligence, it still has some advantages. The bad quality is the battery, the cost. This has to be carried away by death. However, NIO also really needs to focus on cars. Personally, I don't think there's really any need to invest in other phones. Now that so many models are being invested in research and development, they need to be converted into results as soon as possible!
cola1010 : Nio Limited (NIO) is a Chinese company that designs, develops, manufactures, and sells smart electric vehicles. NIO shares have begun to rise as a result of higher than expected delivery totals. NIO recently reported its Q3 earning, it had delivered above expectation of delivery totals of vehicle, including the premium smart electric SUVs and premium smart electric sedans. This represents a year over year increase of more than 174%. The metric is significant not only because NIO is a fast-growing electric vehicle manufacturer, but also because it operates in the premium segment. Expectations for vehicle sales and total revenue were much higher entering this year, given that the company was ramping up additional production capacity as well as launching new models. Overall, this company can make a strong case for its value as well as strong delivery guidance for the next quarter and full year.
zcole1101 : opportunity
zcole1101 : my dreamcar
kind Dolphin_7635 : NIO Inc., has a very good prospect, broad market, upward space.
Blessedme : Cannot wait to sell off all China stocks. In case policy change or they did not submit relevant documents to the Securities Exchange, money stuck or gone.
Patient Investor : Once China opens up, and fed interest rate hikes cease, we will see china’s economy and stock soaring to the skies possibly going towards pre-Covid period. Only a matter of time for companies like NIO, EV producer, to eventually replace patrol dependent car producing companies
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