Investment Rating - Maintain HOLD rating for NIO Inc (NIO US) with a revised target price of US6 80 [2] Core Views - NIO's cash burn has accelerated despite the capital injection from CYVN, and the company shows no clear strategy to achieve profitability [2] - The company's 4Q23 earnings missed expectations, particularly in other income and SG&A expenses, with an operating loss of RMB6 6bn, RMB1 9bn higher than projected [2] - Management's FY24E gross profit margin (GPM) guidance of 15-18% is considered overly optimistic, especially given the failure to achieve 15% GPM in 3Q23 and 4Q23 [2] - Even with a 15% vehicle GPM and disciplined R&D and SG&A spending, NIO's FY24E net loss is expected to exceed RMB10bn, far from profitability [2] Financial Performance - 4Q23 revenue and gross profit from vehicles were in line with forecasts, but vehicle GPM of 11 9% missed the guidance of 15% [2] - Gross margin for other revenue was -34%, below the projected -25%, indicating that the elimination of service benefits is impacting margins more than expected [2] - R&D and SG&A expenses in 4Q23 were RMB720mn higher than estimates, contributing to the larger-than-expected operating loss [2] - FY24E sales volume forecast has been cut from 0 21mn units to 0 19mn units due to delayed deliveries of the second brand Alps [2] Earnings and Valuation - FY24E net loss revised from RMB14 7bn to RMB17 2bn, reflecting higher-than-expected costs and lower margins [2] - Target price cut to US$6 20 based on 1 4x revised FY24E revenue estimates, compared to Li Auto's 1 3x FY24E P/S [2] - NIO's profitability remains significantly weaker than peers like Li Auto, which trades at a lower P/S multiple [2] Quarterly Results - 4Q23 sales volume was 50,045 units, down 9 7% QoQ but up 25 0% YoY [7] - Overall ASP in 4Q23 was RMB341,756, down 0 6% QoQ and 14 8% YoY [7] - Gross margin improved to 7 5% in 4Q23, up 3 6ppt YoY but down 0 5ppt QoQ [7] - Operating margin was -38 7% in 4Q23, a decline of 13 3ppt QoQ [7] Financial Summary - FY23E revenue is projected at RMB55,618mn, with a gross margin of 5 5% [9] - FY24E revenue is expected to grow 17 3% to RMB65,239mn, with a gross margin of 8 1% [9] - FY24E operating profit is forecast at a loss of RMB18,814mn, improving from FY23E's loss of RMB22,655mn [9] - Net profit for FY24E is projected at a loss of RMB17,170mn, slightly better than FY23E's loss of RMB21,147mn [9] Cash Flow and Balance Sheet - FY23E net cash from operations is expected to be negative at RMB1,872mn, worsening to RMB10,446mn in FY24E [10] - Cash and equivalents are projected to decline from RMB32,935mn in FY23E to RMB22,783mn in FY24E [9] - Total liabilities are expected to decrease slightly from RMB87,787mn in FY23E to RMB74,228mn in FY24E [9] Growth and Profitability - FY24E revenue growth is forecast at 17 3%, with gross profit growth of 72 8% [10] - Operating margin is expected to improve from -40 7% in FY23E to -28 8% in FY24E [10] - Adjusted net profit margin is projected to improve from -33 2% in FY23E to -23 4% in FY24E [10]
Cash burn speeds up with capital injection