Funding bankers aren’t at all times right concerning the shares they suggest shopping for (or promoting). However there’s one factor you’ll be able to rely on them being helpful for: Getting direct entry to firm administration, and digging out info that will curiosity different traders.
Final week, Deutsche Financial institution analyst Edison Yu carried out this service for out of doors traders when he was in a position to host Steven Feng, and get the NIO (NIO) CFO to offer some perception into the Chinese language electrical automobile firm’s future plans throughout “digital investor conferences.” In a wide-ranging dialogue, Feng revealed NIO’s plans for the long run as regards:
Persevering with to develop its “premium/luxurious” China enterprise.
Constructing an EV to compete with the upcoming Tesla Mannequin 2.
Increasing its enterprise into Europe.
Constructing the model in China
NIO believes that it provides clients in China a superior “possession expertise” to what Tesla can provide. Though traders may fear that worth cuts instituted within the nation on Tesla’s Mannequin Y crossover EV may eat into NIO’s enterprise, Feng says that, on the contrary, in China Tesla tends to serve a helpful objective by attracting house owners of conventional inside combustion engine vehicles to the concept of proudly owning an electrical car. However as soon as they’re , clients typically choose to purchase a NIO.
Why? Identify recognition is one issue. Feng says that inside China, NIO has 80% model consciousness, and is admired for its inside design, dealing with/suspension, and “post-purchase service” — particularly its know-how that allows batteries in NIO vehicles to be “chargeable, swappable, and upgradeable” (to batteries with longer vary). 55% of NIO house owners at this time subscribe to the corporate’s “Battery-as-a-Service” plan, shopping for their vehicles, however subscribing to the batteries that run them. And NIO plans to roll out autonomous driving software program as a $100-a-month subscription providing starting in Q1 2022.
Tesla, in distinction, sells its batteries built-in into its vehicles — and sells it autonomous driving software program bundle as an improve.
Taking over the Tesla 2
Equally, Feng sees Tesla’s upcoming financial system mannequin Tesla 2 as extra of a chance than a menace. NIO plans to maintain its deal with the posh market in China, but additionally develop a brand new model of cheaper EVs to compete with the Tesla 2, rising its manufacturing quantity of vehicles offered at lower cost factors “within the subsequent few years.”
This manner, confides Feng, NIO can “keep its premium fame whereas the corporate goes after larger progress.”
NIO’s ambitions aren’t restricted to China, both. On the contrary, the corporate is already planning to develop into the European market later this yr. Whereas in China, the corporate targets 25% to 30% market share within the premium EV phase, in Europe, NIO says it is going to be glad with simply 10% to fifteen%. The corporate plans to supply “customized tailor-made” European choices to the native market.
And to help all this growth, NIO — which offered fewer than 44,000 vehicles final yr — plans to develop its manufacturing capability to 150,000 vehicles per yr by the top of 2021. Even then, NIO will not be achieved. In line with Feng, the corporate sees its whole addressable market worldwide as nearer to 700,000 vehicles yearly.
Primarily based on all the above, Yu charges NIO shares a Purchase together with a $70 worth goal. The implication for traders? Upside of 56%. (To look at Yu’s monitor file, click on right here)
Wall Road is broadly in settlement with this evaluation. Over the past couple of months, NIO has acquired 7 Purchase rankings from Road analysts, in comparison with 3 Holds. With a median worth goal of $65.24 per share, the potential upside stands at 45%. (See NIO inventory evaluation on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is extremely essential to do your personal evaluation earlier than making any funding.