NIO Q4 2021 earnings preview

Nio strategies to start off deliveries of its ET7 electric sedan in 2022.

Evelyn Cheng | CNBC

Nio’s smooth and impressive electric powered motor vehicles have captured the attention of buyers – and rival automakers – all-around the environment, but they haven’t constantly been in a position to electrical power past the provide-chain disruptions that have played havoc with the Chinese firm’s formidable profits-expansion strategies.

Wall Avenue analysts on Thursday will most likely talk to Nio’s senior management some tough queries about how those people offer-chain challenges, and the current speedy value boosts impacting vital commodities like nickel, are probably to play out in coming months. The automaker experiences its fourth-quarter earnings just after the U.S. markets shut. An earnings webcast is scheduled to commence at 9 p.m. ET.

When among the meme-stock high flyers, Nio’s American depositary shares have experienced a tough time about the previous a number of months as relations involving the U.S. and China have cooled.

Nio’s earnings report by itself isn’t most likely to maintain a good deal of surprises. The corporation shipped just around 25,000 vehicles in the quarter, near the superior end of its steering variety (23,500 to 25,500). Traders will be listening for updates on Nio’s initiatives to broaden its seller network in China and to start gross sales in numerous new European markets.

They will also be looking for information on Nio’s programs to expand the community of battery-swap stations that are the spine of the firm’s progressive income model. Customers can choose to buy a Nio without having a battery pack, at a sizeable price reduction, if they subscribe to its battery-swap support.

Nio isn’t widely covered by U.S. financial institutions, but the four Wall Avenue analysts who answered a Refinitiv study anticipate Nio to post a decline of 2.97 Chinese yuan ($.47) for each share, on common. Eight analysts said they anticipate Nio to report profits of 8.682 billion yuan ($1.36 billion), on normal.

Provide chains and outlook

People analysts will possible have some questions all around the fourth quarter’s costs and margins, but the serious story will possibly be in the firm’s guidance for the latest quarter and the full calendar year.

Nio, like many other automakers, was compelled to minimize creation at times in 2021 thanks to supply-chain disruptions, together with a world-wide lack of the styles of semiconductor chips applied in autos. In recent months Nio has been in a position to perform about those supply-chain problems and preserve a output level between 10,000 and 11,000 vehicles a month. (Deliveries dipped underneath that level in February, to just 6,131, due to the fact of factory downtime all over China’s Lunar New 12 months celebrations.)

Deutsche Lender analyst Edison Yu watches Nio and its important domestic rivals closely. In a March 20 observe, he brushed off offer-chain worries and explained that he expects the firm’s manufacturing output to increase appreciably about the future numerous months.

“We see the [manufacturing] operate-charge escalating to 15,000-20,000 for every thirty day period by June,” Yu wrote. Just after that, he thinks, a new manufacturing facility – predicted to be up and working in the slide — will support the business ramp up its manufacturing output to 30,000 for every thirty day period by someday in the very first 50 % of 2023.

Assuming it performs out that way, that profits development will get a improve from the 3 new types that Nio is expected to start in 2022, two sedans and an SUV. Production of the larger sized of the two sedans, a tech-packed model named the ET7, started on Thursday morning, Nio declared in a WeChat article.  

Yu thinks that soaring raw materials expenditures will place strain on Nio’s margins around at minimum the subsequent several months, but he notes that the business has a prepare to tackle that by using reduced-value lithium iron phosphate, or LFP, batteries in its typical-variety versions.

Yu stays bullish on Nio with a buy score and a price tag goal of $50.

Morgan Stanley analyst Tim Hsiao is also nevertheless bullish on Nio, but he lower his bank’s selling price concentrate on to $34 from $66 in a Tuesday take note, reflecting the stock’s modern slide. Hsiao wrote that “elevating macro headwinds and severe supply troubles” will make the in the vicinity of expression demanding for Nio, but he feels that its “exceptional liquidity and income visibility” have it nicely-positioned to ride out any financial downturn.