One of the popular Hong Kong stocks, NIO Inc. (HK:9866), presents an attractive opportunity for investors with a strong upside potential over the next 12 months. NIO is a leading Chinese automobile company, specializing in premium smart EVs (electric vehicles). Over the last year, NIO stock has continued its downward trajectory, reflecting the broader challenges faced in the EV space, including competitive pressures and widespread price reductions. Despite these headwinds, NIO recently reported mixed performance in 2023.
Looking ahead, analysts have expressed optimism regarding Nio’s long-term outlook, anticipating improvements in the future. However, the stock could remain volatile in the short term.
A Mixed Performance in 2023
Last week, Nio reported total revenues of ¥55.6 billion in 2023, marking a 12.9% rise from the preceding year. Vehicle sales during the period grew by 8.2% over 2022. Despite higher deliveries and sales, the company reported a net loss of ¥20.7 billion, which was 43.5% higher than the previous year. This was mainly due to Nio’s strategy to include more affordable models along with price cuts in the industry.
For Q1 2024, the company expects vehicle deliveries of 31,000 to 33,000, indicating a decline of approximately 0.1% to an increase of 6.3% compared to the same period of 2023.
DBS Remains Bullish
Post-results, analyst Rachel Miu from DBS reiterated a Buy rating on Nio stock, predicting around 45% upside in the next 12 months. Miu believes that the company’s launches, like ALPS in the second half of 2024, Firefly, and NIO ET9 in 2025, will significantly increase production volumes, thereby expanding its market share. The company is introducing Firefly and ALPS to tap into the affordable segment of the EV sector.
Furthermore, the analyst highlighted that Nio aims to construct 1,000 battery swap stations and 20,000 battery charging stations in 2024. This move is expected to strengthen the company’s position as an industry leader in EV battery swapping over the long term, considering its open battery network for other automakers.
Speaking of risks, Miu reduced her vehicle sales growth estimate for Nio from 70% to 60% in 2024 due to industry headwinds and intense competition.
What is the Price Target for NIO Stock?
As per the consensus among analysts on TipRanks, 9866 stock has been assigned a Moderate Buy rating based on three Buy and three Hold recommendations. The NIO share price target is HK$65.52, which implies an upside of 46.7% from the current price level.
Conclusion
Nio stock has been under pressure due to the macro uncertainty in China and intense competition in the EV space. That said, the average price target of analysts indicates expectations of a strong rebound in the stock, reflecting optimism in the company’s long-term growth potential.
