Bernstein SocGen Reiterates Market Perform Rating and $5.50 PT on NIO

Bernstein SocGen Group analyst Eunice Lee reiterated a Market Perform rating and $5.50 price target on NIO (NYSE: NIO).

“Strong Q4 with first profit & Upbeat Q1 guide, yet R&D pullback warrants monitoring for long-term competitiveness; Strong Q4 with first-ever profit.

NIO reported Q4 revenue of RMB 34.7bn (+76% yoy and +59% qoq). Q4 volume came in at 125k units, (+72% yoy and +43% qoq).

ASP improved to RMB 253k (+5% yoy and +15% qoq) on better product mix from ES8, priced from RMB 406.8k (32% of mix, vs. 5% in Q3).

Gross margin came in stronger than expected at 17.5%, with vehicle margin expansion to 18.1%, vs. 14.7% in Q3, driven by ES8, improved scale, and cost reductions from facelifted models.

The company had guided to non-GAAP breakeven for Q4 and issued a profit alert; it ultimately outperformed, delivering profitability at the high end of the alert range and achieving GAAP net profit as well.

Net profit reached RMB 283mn, versus RMB 3.5bn loss in Q3. The beat was supported by a higher premium mix such as with ES8, as well as a sharp pullback in operating expenses.

R&D spending fell to RMB 2bn (-44% yoy, -15% qoq) and SG&A to RMB 3.5bn (-28% yoy, -16% qoq), bringing total opex down by RMB 3bn yoy and RMB 1bn qoq.

While improved efficiency is encouraging, the scale of the R&D pullback warrants attention given peers’ rapid progress in ADAS development and the potential implications for long-term competitiveness.”

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