Deutsche Bank gives positive read on Nio China's new financing
Nio announced earlier today that Nio China has secured a new investment from three strategic investors in Hefei. Anhui province, in which it holds a 92.1% controlling stake.
This is favourable to the stock price in Deutsche Bank's view.
"We consider the above-mentioned RMB 3.3 billon fund-raising in Nio China positively, as this move reduces some investor concerns on the immediate share dilution in Nio list co," analyst Wang Bin's team said in a research note sent to investors today.
They expect the share price to react positively on the 'Nio China' fund-raising.
The three existing strategic investors will invest a total of RMB 3.3 billion (USD470 million) in cash to subscribe for newly issued shares in Nio China.
At the same time, Nio will invest a total of RMB 10 billion in cash for newly issued shares in Nio China.
The strategic investors and Nio will inject capital into Nio China in two phases, with 70% of the strategic investment amount and Nio investment amount to be made by the end of Nov 2024, with the remaining 30% to be made by the end of Dec 2024.
Upon completion of the investment transaction, Nio will hold a controlling 88.3% stake in Nio China, and the strategic investors, together with other existing shareholders, will hold the remaining 11.7% stake in Nio China.
Nio also has the right to invest an additional RMB 20 billion to subscribe for additional shares in Nio China by Dec 31, 2025, at the same price and on the same terms as the investment transaction.
Over the past 8 quarters, Nio has averaged losses of about RMB 5.2 billion per quarter and has RMB 15.1 billion of net cash on its balance sheet, the team noted.
As a result, some investors expected Nio to raise capital in the next three quarters, which had a negative impact on Nio's valuation multiples as investors worry about potential dilution.
The newly announced financing alleviates some investor concerns about immediate equity dilution at Nio, the team said.
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VCasts : does this mean its still a good buy at this current price?
73162089 : 3 years ago Hefei government fund invested NIO, share price went up from $3 to highest $65 within 12 months. Hope this time NIO can go even higher.
WayneTheBoon 73162089 : But when they cashed out, we all got burnt
105616813 WayneTheBoon : you meant cashed out at 65? now it's 7.
bullrider_21 OP VCasts : I think it will continue to rise. But it has risen a lot already, so there may be a pullback.
bullrider_21 OP 73162089 : I won't attribute the rise to 65 to the strategic investors. I think the price was a bubble then.
NVDAvsTSLA bullrider_21 OP : 你预测回调的时候估计不会，但当你觉得不会的时候，就有可能发生了
bullrider_21 OP VCasts : I think it may rise to around 8.0 before a pullback may occur.