Morgan Stanley Keeps Nio’s ‘Overweight’ Rating and $6.50 PT

“NIO’s share price has risen 90%+ from the trough in June (vs. HSI +9%), reaching our price target of US$6.5/HK$50.7.

Will the rally change the stock narrative? 4 key thoughts below:

1. Robust ES8 pre-orders: Our checks suggest ES8 pre-orders (with Rmb5k refundable deposit) may have surpassed 30k at the weekend and kept rising.

While real demand still hinges on order conversion, constructive feedback underpin the market’s belief that ES8 could go viral as L90 did last month, underpinning a monthly run rate of 40-50k units for NIO Group from Oct.

2. Benign fund flow: NIO shares’ trading value has grown above US$2.5bn over the past 2 days, equivalent to the cumulative value over the past 2 weeks.

3. Sentiment: While debates on the sustainability of NIO’s recovery persist, we noticed a sharp decline in client enquiries on NIO’s underlying demand and execution risk.

We’ve been asked more about the upcoming L60 and L80 facelifts (both early next year).

4.

The stock upward movement has been self-reinforcing as investors believe NIO’s share price performance is correlated to capital markets’ willingness to finance its operation and strategic ambitions, which is also linked to its operational value and ability to navigate the accelerating auto industry shakeup.”

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