NIO Fourth Quarter Results Preview

Net Loss Forecast

• Full-year net loss is estimated at 19.55 billion yuan ($2.72 billion), according to analysts polled by FactSet.
• This compares with a loss of CNY14.56 billion in 2022.
• The estimated net loss for the fourth quarter is about CNY4.00 billion, narrowing from CNY4.56 billion in the previous quarter.

Adjusted Net Loss Forecast

• Adjusted 2023 net loss, which excludes share-based compensation expenses and other items, is forecast at CNY17.61 billion.
• This represents a widening from CNY11.98 billion.

Revenue Forecast

• Quarterly revenue is estimated at CNY17.11 billion, up approximately 6.5% from the previous year.
• The revenue is higher than December guidance but down 10% from the third quarter.
• The expected sequential drop is attributed to an ongoing price war in China’s electric-vehicle market.

The automaker had previously guided for a moderate rise in revenue compared to the previous year but ended up exceeding expectations with a remarkable deliveries number surpassing 50,000 vehicles.

Hong Kong-Listed Shares Down 3% in Q4, over 40% YTD

In the fourth quarter, Hong Kong-listed shares experienced a 3.0% decrease, adding to the more than 40% decline seen year to date.

Key Points to Monitor:

Outlook:

• NIO usually provides guidance for the current quarter, outlining estimates for vehicle deliveries and revenues. Analysts are keen on understanding the delivery guidance as it reflects the company’s strategy amidst an escalating price war. Of particular interest is whether NIO is focusing on sales targets in the overseas or domestic market, according to Ke Qu of CCB.

Margins:

• NIO’s gross margin stood at 8.0% in the third quarter, a decrease from 13.3% compared to the previous year but an improvement from the 1.0% seen in the second quarter. Investors will be observing margin trends to assess the company’s profitability and ability to control costs. Li Auto, a rival, reported a gross margin of 23.5% in the fourth quarter and 22.2% for the entire year, while Tesla’s global gross margin for 2023 was 18.2%.

OPEX:

• In light of NIO’s announcement in November about a planned reduction of 10% of its workforce, investors are monitoring efforts to streamline costs. There is a particular interest in whether NIO effectively managed its spending on selling, general, and administrative expenses as well as research and development following the layoffs, as noted by 86 Research analyst Hanyang Wang.