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Analysis by NIO Inc.

Analysis by NIO Inc.

26 January 2022

NIO is a Chinese company that designs and manufactures electric vehicles. In 2016 NIO announced that it had received an “Autonomous Vehicle Test Permit” from the California DMV and began testing on public roads. It is planned to launch machines with the third and fourth levels of autonomy. The third is when the driver is still sitting in the driver’s seat, his intervention in the driving process may be necessary, but there is no need to keep an eye on the road. The fourth is when the steering wheel and pedals are still there, but the driver may not sit in the front row of seats.

In 2018 the company opened its first battery replacement station in China.
Deliveries to Norway have been announced in 2021.
Unlike Tesla, which has tried battery replacement but never applied it on a large scale, Nio has built a functioning network of 700 battery replacement stations that spans several thousand kilometers of China’s expressways.
The company is headquartered in Shanghai, China and was founded in 2014.
In a broad sense, the company is not yet in the black, but it is no longer in the red. Revenue has grown 6.6 times over 4 years! There is no profit, but the loss is reduced every year. Free cash flow for the last 12 months was minus $14 million, but in 2020 it was plus $132 million.

Multipliers:
There is no P/E because the company is at a loss
P/B 14 (industry average 7.4)
P/S 10.1 (industry average 30.8)
Debt of $19.2 billion with current operating cash flow of $2.4 billion
No dividends
Share price: $24
The discounted cash flow model shows a fair price of $16.
Simply Wall Street values the company at $21.
The 7 analysts leading the company give an average estimate of $61.

Shares are trading below the 20, 50 and 200-day moving averages. Now the price has broken through a strong support line and has rushed to the $20 area. Strong reporting will reverse this trend, but whether it will be in the current quarter or next is unknown. The stock price is now as good as it was in December 2020 and the business has improved since then.

Conclusion: everyone on the market is looking for a second Tesla. But the Chinese company went the other way. Tesla has cars cheaper than Nio. But Nio doesn’t have cars worth $100,000. The Chinese have more advanced technological developments that Musk doesn’t have. They follow Tesla, but they are ready to make the same leap in the number of cars produced that Tesla has previously made. It seems that the Chinese company has a good future. It has money and has a growth strategy. If you don’t believe in Chinese business horror stories, then this might be the growth company you’ve been looking for.

26 January 2022
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