NIO INC(09866.HK)：MONTHLY DELIVERY VOLUME HITS RECORD HIGH;RAMP-UP OF ET7 BEATS EXPECTATIONS-格隆汇

机构：中金公司
研究员：Xue DENG/Jing CHANG/Dongji YANG

　　What's new
　　NIO’s delivery volume was 12,961 units for June (+60.3% YoY and +84.5% MoM) and 25,059 units for 2Q22 (+14.4% YoY and -2.8% QoQ).
　　Comments
　　Monthly delivery volume hit record high; ramp-up of ET7 beat expectations. Monthly delivery volume in June rose 84.5% MoM to 12,961 units. The firm’s production capacity further expanded thanks to its F-1 factory, and we expect monthly capacity of the F-1 factory to reach 15,000-17,000 units in 3Q22. Delivery volume reached 1,684 units for ES8 (+125.7% MoM), 5,100 units for ES6 (+73.7% MoM) and 1,828 units for EC6 (+11.8% MoM). The firm on June 15 released its 2022 version of 866 model installed with its Alder intelligent system, which upgraded hardware and user experience with a digital cockpit platform and 5G high-performance central gateway. This will enhance the competitiveness of the 866 model, in our view. The delivery volume of ET7 rose 154.8% MoM to 4,349 units, continuing to ramp up after its delivery started in end-March and booking cumulative delivery of 6,912 units. The pace of ramp-up beat our expectations.
　　Watch potential upside surprise in delivery in 2H22. The firm continues to expand its product portfolio, and now offers four SUVs and two sedans with strong competitiveness in the high-end battery-electric vehicle market. On the demand side, orders on hand remain strong for new models such as ET7 and ET5, which we expect to support further growth in deliveries. On the supply side, we expect the firm’s factories with JAC and in Xinqiao (starting to produce ET5 in 3Q22) to support monthly output and sales volume of 20,000-30,000 by end-2022. We suggest watching the ramp-up of ET5 at the firm’s F2 factory. Market expectations are relatively low for the incremental volume from ES7 and the ramp-up of ET5, and we think that monthly delivery volume may beat market expectations. We foresee upside surprise in output and sales volume and increases in gross margin, considering the gradual delivery of price-hiked orders and ramp-up of models such as ES7 and 2022 version of 866.
　　NIO Power in operation for four years; launching self-developed intelligent chassis domain controller (ICC). The firm had 996 battery swap stations as of end-2Q22, and they have provided over 9.70mn battery swap services. NIO has largely established an extensive network of fast battery swap stations in major metropolitan areas. We expect battery-as-a-service (BaaS) and the separation of vehicles and batteries to help NIO create a competitive barrier, which will likely help lower the purchasing threshold for consumers and provide a reliable, economical, convenient and secure experience of power replenishment. In addition, the firm equipped its NT2.0 platform with the first full-stack self-developed intelligent chassis domain controller (ICC). Through smart integration of software and hardware, the ICC enhances the performance and experience of NIO’s vehicles and further optimizes chassis control. Specifically, the ICC not only integrates traditional functions such as braking, steering, and suspension, but also supports advanced-level autonomous driving and firmware-over-the-air update. The ICC further strengthens NIO’s capabilities in engineering R&D, in our view.
　　Financials and valuation
　　We maintain OUTPERFORM and earnings forecast. NIO is trading at 3.0x 2022e EV/revenue. We are upbeat about improving fundamentals in the coming year. We raise ADR and H-share TPs 12.0% and 12.2% to US$28 and HK$220 (exchange rate conversion), based on 4.8x 2022e EV/revenue and implying 31.1% and 27.9% upsides.
　　Risks
　　Chip shortage affecting output and sales; disappointing ramp-up of new models.