Looking ahead | What to look for in NIO's Q4 earnings report? Is the net loss expected to continue narrowing?
CICC International estimates that NIO-SW's net loss in the fourth quarter of last year is expected to narrow slightly to 4.4 billion yuan compared to the previous quarter. However, looking ahead to 2024, considering the lack of new car contributions in the first half of the year and the internal cannibalization of existing models, NIO-SW's sales growth this year may be the lowest among the three new forces.
Tomorrow (March 5th), NIO-SW will release its fourth-quarter earnings report. Following the report, the company will hold an earnings conference at 8:00 p.m.
Key points for investors to focus on: Is the net loss expected to continue narrowing? When is the company expected to turn losses into profits?
According to CICC's forecast, considering that NIO-SW's end discounts are lower than other major brands, it is expected that its average vehicle selling price will decrease by 2% MoM to 309,000 yuan. The impact of the price decline is expected to be offset by the decrease in battery costs, estimating that the gross profit margin of the vehicle business in the fourth quarter is expected to improve by 0.7 percentage points MoM to 11.7%.
However, with the withdrawal of battery swapping rights, the bank predicts that the company's other income and gross profit margin may decline MoM. Overall, it is estimated that NIO-SW's net loss in the fourth quarter of last year is expected to narrow slightly MoM to 4.4 billion yuan.
For the entire year 2024, CICC maintains its sales forecast for NIO-SW at 210,000 units, with a comprehensive gross profit margin improvement to 8.1%.
Considering the lack of new car contributions in the first half of the year and the internal cannibalization of existing models, NIO-SW's sales growth this year may be the lowest among the three new forces.
Taking into account the company's measures to cut non-core businesses, the bank predicts that its R&D and sales management expenses are expected to decrease YoY, but the net loss for this year could still reach 14.6 billion yuan.
The bank believes that the investment of over 20 billion yuan by the Abu Dhabi sovereign wealth fund in NIO-SW last year can support its development needs in 2024-25, which is also a crucial window for the company's survival. However, the company still needs to clarify its strategic direction to have a chance of turning losses into profits in the foreseeable future, especially regarding the development strategy of the second brand, Alps.