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The price target reflects a new price objective on ADR shares – $29.00 per share, down from the prior $56.00.
“Given the high battery usage (75KWh / 100KWh), Nio is exposed to greenflation pressure to a significant extent. We notice that Nio hasn’t announced pricing changes on cost pressure year to date, nor is it passing the subsidy reduction to customers. Therefore, we lower the company’s gross margin by 2-4pp in 2022-24E. Our valuation remains unchanged on DCF, with WACC revised from 9% to 14% (at 3.5% risk-free rate, 6.5% equity risk premium and 1.58 beta),” Fang wrote in a client memo.
Earlier today, NIO ADRs have been reinstated at Buy at China Renaissance with a price target of $32.40.
Nio stock is down 4% today.
By Senad Karaahmetovic
