NOK earnings preview Q4 2021

Nio plans to begin deliveries of its ET7 electric sedan in 2022.

Evelyn Cheng | CNBC

Nio’s sleek and powerful electric vehicles have caught the attention of investors — and rival automakers — around the world, but they haven’t always been able to weather the supply chain disruptions that have ravaged the Chinese company’s ambitious sales growth plans .

Wall Street analysts are likely to ask Nio’s management some tough questions Thursday about how these supply chain issues and recent rapid price increases affecting key commodities like nickel are likely to play out in the coming months. The automaker reports its fourth-quarter results after US markets shut down. A prize webcast is scheduled to begin at 9:00 p.m. ET.

Nio’s American Depositary Shares, which was once among the high-flyers of meme stocks, has had a rough time in recent months as US-China relations have cooled.

Nio’s earnings report itself probably won’t come up with many surprises. The company delivered just over 25,000 vehicles in the quarter, near the high end of its guidance range (23,500 to 25,500). Investors will be listening for updates on Nio’s efforts to expand its dealer network in China and begin selling in several new European markets.

They’ll also be looking for details on Nio’s plans to expand the network of battery swap stations that form the backbone of the company’s innovative sales model. Buyers can choose to purchase a Nio without a battery pack at a significant discount by subscribing to the battery replacement service.

Nio doesn’t get extensive coverage from US banks, but the four Wall Street analysts who answered a Refinitiv poll expect Nio to average losses of 2.97 Chinese yuan ($0.47) per month share will be booked. Eight analysts said they expect Nio to report average revenue of 8.682 billion yuan ($1.36 billion).

Supply Chains and Outlook

Those analysts will likely have some questions about fourth-quarter expenses and margins, but the real story will likely be found in the company’s guidance for the current quarter and full year.

Nio, like many other automakers, was forced to temporarily reduce production in 2021 due to supply chain disruptions, including a global shortage of the types of semiconductor chips used in cars. Over the past few months, Nio has been able to sidestep these supply chain issues and maintain a production rate of between 10,000 and 11,000 vehicles per month. (Shipments slipped below that level to just 6,131 in February due to factory shutdowns surrounding China’s Lunar New Year celebrations.)

Deutsche Bank analyst Edison Yu is keeping a close eye on Nio and its key domestic peers. In a statement on March 20, he brushed aside worries about the supply chain and said he expected the company’s manufacturing output to increase significantly in the coming months.

“We see them [manufacturing] The production rate will increase to 15,000-20,000 per month by June,” Yu wrote. After that, he believes, a new factory – expected to start up in the fall – will help the company ramp up its output to 30,000 a month by sometime in the first half of 2023.

Assuming this plays out, sales growth will be boosted by the three new models Nio is expected to launch in 2022, two sedans and an SUV. Production of the larger of the two sedans, a tech-packed model called the ET7, started Thursday morning, Nio announced in a WeChat post.

Yu believes that rising raw material costs will put pressure on Nio’s margins for at least the next few months, but he notes that the company plans to counter this by using lower-cost lithium iron phosphate, or LFP, batteries in its commodity batteries . Models area.

Yu remains bullish on Nio with a Buy rating and a price target of $50.

Morgan Stanley analyst Tim Hsiao is also still bullish on Nio, but he cut his bank’s price target to $34 from $66 in a note Tuesday, reflecting the stock’s recent decline. Hsiao wrote that “increasing macroeconomic headwinds and serious supply issues” will challenge Nio in the near term, but he thinks its “superior liquidity and revenue transparency” puts it well-positioned to weather any economic downturn. NOK earnings preview Q4 2021

Jane Marczewski

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