NIO - Bad Q4'22 But Is The Worst Over?

I'm gonna be honest, it's bad.

Here's why, but do take note, what's the upcoming prospect

Even though the topline increased by 23.7% QoQ admirably, the vehicle margin dropped from 16.4% to 6.8%, a -960bps drop.

This was due to inventory provisions, accelerated depreciation on production facilities, and losses on purchase commitments for the existing generation of ES8, ES6, and EC6.

Increased battery cost per unit also whipsawed the vehicle margin, which in the end reduced the gross margins.

This in the end also exacerbated the net loss and net loss attributable to shareholders.

The worst seems to be over for China, as it slowly reopens. The manufacturing purchasing managers' index (PMI) shot up to 52.6 from 50.1 in January, according to China's National Bureau of Statistics.

However, looking at Nio's business outlook, it targets only the delivery of 31,000 to 33,000 vehicles. This will be just a 20.3 - 28.1% increase, even though many would argue this quarter coincides with the long Lunar Year.

However, total revenues of a forecasted growth of just 10.2%-16.5% mean that vehicle margins look likely to be suppressed.

What do you think? Do you agree?

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