Tag: NIO Inc. (NIO)

4 Stocks to Buy Instead of TSLA as Its Downtrend Continues

Posted on by The INO.com Team

Tesla, Inc. (TSLA) aims to sell 20 million EVs a year by the end of this decade. However, the company faces steep competition from other manufacturers as they launch their battery electric vehicles (BEVs) and invest in ramping up their EV manufacturing capabilities.

To ward off competition and economic uncertainty, TSLA has cut the prices of its vehicles this year. Recently, the company cut the prices for Model 3, Model S, and Model X in the United States. In China, TSLA reduced Model S and X prices. The company has been focusing on boosting volume growth by lowering prices, but it is affecting its gross margins.

Due to price cuts, discounts, and tax credits, the company reported delivering a record-setting 466,140 vehicles during the second quarter. However, Wall Street analysts have cut TSLA’s third-quarter delivery estimates by 2%. They expect the EV maker to deliver 462,000 vehicles during the third quarter.

TSLA CEO Elon Musk had said during the second-quarter earnings call that although it was sticking to its target of producing 1.8 million vehicles, third-quarter production would take a hit due to essential factory upgrades that would take place during the quarter.

Some analysts have forecasted that delivery numbers will be less than 460,000 units. Deutsche Bank analyst Emmanuel Rosner lowered his delivery expectations to 440,000, down from his previous forecast of 455,000. Baird analyst Ben Kallo has projected that the third quarter deliveries would be 439,200 units.

Rosner said, “Tesla’s 3Q 2023 deliveries and production could miss Street expectations, but more important, we see meaningful downside risk to 2024 consensus due to limited volume growth next year.” The analyst has cut its target price on TSLA to $285 from $300.

Amid the confusion over the third-quarter deliveries and production figures, many analysts are worried that TSLA’s production next year will be lower than the previous estimates. Deutsche Bank believes the EV maker’s earnings could face headwinds in 2024. In an investor meeting, they said that TSLA suggested that it was not looking to ramp up production at its Austin and Berlin factories to 10,000 units per week next year.

The bank has forecasted that TSLA will produce 2.1 million units next year, down from the previous consensus estimate of 2.3 million units. They also reduced the price target of TSLA to $285 per share from $300.

Moreover, TSLA is currently trading at an expensive valuation. In terms of forward EV/EBITDA, TSLA’s 42.58x is 364% higher than the 9.18x industry average. Likewise, its 7.47x forward EV/Sales is 564.3% higher than the 1.12x industry average. Its 70.97x forward non-GAAP P/E is 410.1% higher than the 13.91x industry average.

Given the uncertainty surrounding TSLA’s near-term prospects, it could be wise to buy fundamentally strong auto stocks Ferrari N.V. (RACE), General Motors Company (GM), Li Auto Inc. (LI), and NIO Inc. (NIO).

Let’s discuss these stocks in detail.

Ferrari N.V. (RACE)

Headquartered in Maranello, Italy, RACE designs, designs, produces, and sells luxury sports cars worldwide. The company offers a range, special series, Icona, and supercars; limited edition supercars and one-off cars; and track cars. It also provides racing cars, spare parts and engines, and after-sales, repair, maintenance, and restoration services for cars.

RACE’s revenue grew at a CAGR of 18.2% over the past three years. Its EBITDA grew at a CAGR of 24.2% over the past three years. In addition, its EPS grew at a CAGR of 29.1% in the same time frame.

In terms of the trailing-12-month net income margin, RACE’s 19.46% is 342.8% higher than the 4.40% industry average. Likewise, its 30.86% trailing-12-month EBITDA margin is 180.3% higher than the industry average of 11.01%. Furthermore, the stock’s 6.73% trailing-12-month Capex/Sales is 109.4% higher than the industry average of 3.22%.

RACE’s net revenues for the second quarter ended June 30, 2023, increased 14.2% year-over-year to €1.47 billion ($1.55 billion). Its adjusted EBITDA rose 32.1% over the prior-year quarter to €589 million ($620.54 million). The company’s adjusted EBIT increased 35.3% year-over-year to €437 million ($460.40 million).

Its adjusted net profit rose 33.1% year-over-year to €334 million ($351.89 million). Also, its adjusted EPS came in at €1.83, representing an increase of 34.6% year-over-year.

Analysts expect RACE’s revenue for the quarter ending September 30, 2023, to increase 25.8% year-over-year to $1.55 billion. Its EPS for the fiscal period ending March 2024 is expected to increase 8.8% year-over-year to $1.94. It surpassed the consensus EPS estimates in each of the trailing four quarters.

General Motors Company (GM)

GM designs, builds, and sells trucks, crossovers, cars, and automobile parts; and provides software-enabled services and subscriptions worldwide. The company operates through GM North America, GM International, Cruise, and GM Financial segments.

On August 16, 2023, GM invested $60 million in a Series B financing round of AI and battery materials innovator Mitra Chem. The company’s AI-powered platform and advanced research and development facility in Mountain View, California, will help accelerate GM’s commercialization of affordable EV batteries.

Gil Golan, GM vice president, Technology Acceleration and Commercialization, said, “This is a strategic investment that will further help reinforce GM’s efforts in EV efforts in EV batteries, accelerate our work on affordable battery chemistries like LMFP, and support our efforts to build a U.S.-focused battery supply chain.

On April 25, 2023, GM and Samsung SDI announced that they plan to invest more than $3 billion to build a new battery cell manufacturing plant in the United States, slated to start operations in 2026.

GM Chair and CEO Mary Barra said, “GM’s supply chain strategy for EVs is focused on scalability, resiliency, sustainability, and cost-competitiveness. Our new relationship with Samsung SDI will help us achieve all these objectives. The cells we will build together will help us scale our EV capacity in North America well beyond 1 million units annually.”

GM’s revenue grew at a CAGR of 13.6% over the past three years. Its EBIT grew at a CAGR of 46.6% over the past three years. In addition, its net income grew at a CAGR of 82.4% in the same time frame.

In terms of the trailing-12-month levered FCF margin, GM’s 7.27% is 42.3% higher than the 5.11% industry average. Likewise, its 15% trailing-12-month Return on Common Equity is 34.2% higher than the industry average of 11.17%. Furthermore, the stock’s 5.95% trailing-12-month Capex/Sales is 84.9% higher than the industry average of 3.22%.

For the second quarter ended June 30, 2023, GM’s total revenues increased 25.1% year-over-year to $44.75 billion. Its net income attributable to stockholders rose 51.7% year-over-year to $2.57 billion. The company’s adjusted EBIT rose 38% year-over-year to $3.23 billion. Also, its adjusted EPS came in at $1.91, representing a 67.5% increase year-over-year.

For the quarter ending September 30, 2023, GM’s revenue is expected to increase 3.9% year-over-year to $43.52 billion. Its EPS for fiscal 2023 is expected to increase 1.5% year-over-year to $7.70. It surpassed the consensus EPS estimates in each of the trailing four quarters.

Li Auto Inc. (LI)

Headquartered in Beijing, the People’s Republic of China, LI designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China. The company provides Li ONE and Li L series smart electric vehicles. It also offers sales and after-sales management, technology development, corporate management services, as well as purchases of manufacturing equipment.

LI’s revenue grew at a CAGR of 263.4% over the past three years. Its total assets grew at a CAGR of 115.8% over the past three years.

In terms of the trailing-12-month levered FCF margin, LI’s 23.51% is 360.2% higher than the 5.11% industry average. Likewise, the stock’s 7.69% trailing-12-month Capex/Sales is 139.2% higher than the industry average of 3.22%.

LI’s total revenues for the second quarter ended June 30, 2023, increased 228.1% year-over-year to RMB28.65 billion ($3.91 billion). Its gross profit rose 232% over the prior-year quarter to RMB6.24 billion ($853.63 million). The company’s non-GAAP income from operations came in at RMB2.04 billion ($279.07 million), compared to a non-GAAP loss from operations of RMB520.80 million ($71.25 million).

Also, its non-GAAP net income stood at RMB2.73 billion ($373.46 million), compared to a non-GAAP net loss of RMB183.40 million ($25.09 million).

Street expects LI’s revenue for the quarter ending September 30, 2023, to increase 245.3% year-over-year to $4.64 billion. Its EPS for the quarter ending December 31, 2023, is expected to increase 151.7% year-over-year to $0.34. It surpassed the Street EPS estimates in three of the trailing four quarters.

NIO Inc. (NIO)

Based in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles in China. It offers five- and six-seater electric SUVs and smart electric sedans. The company also offers power solutions, power chargers and destination chargers, power mobile, power map, and One Click for power valet service.

On July 12, 2023, NIO announced that it closed the $738.50 million strategic equity investment from CYVN Investments RSC Ltd, an affiliate of CYVN Holdings L.L.C., an investment vehicle majority owned by the Abu Dhabi Government with a focus on advanced and smart mobility. The NIO and CYVN entities would collaborate strategically in international business and technology cooperation.

NIO’s revenue grew at a CAGR of 70.6% over the past three years. Its total assets grew at a CAGR of 55.7% over the past three years.

In terms of the trailing-12-month Capex/Sales, NIO’s 17.62% is 447.9% higher than the 3.22% industry average.

For the second quarter ended June 30, 2023, NIO’s total revenues fell 14.8% year-over-year to RMB8.77 billion ($1.20 billion). Its adjusted loss from operations widened 132% year-over-year to RMB5.46 billion ($746.93 million). In addition, its adjusted net loss attributable to ordinary shareholders of NIO widened 140.2% year-over-year to RMB5.45 billion ($745.56 million).

Furthermore, its adjusted net loss per share attributable to ordinary shareholders widened 144.8% year-over-year to RMB3.28.

For the quarter ending September 30, 2023, NIO’s revenue is expected to increase 47.2% year-over-year to $2.66 billion.

4 Stocks Set to Gain From Nissan Motor’s (NSANY) Shady Business

Posted on by The INO.com Team

Last week, the Nissan Motor Co., Ltd. (NSANY) dealership in North Carolina found itself mired in controversy as more than 400 charges were filed against twelve of its current and former employees. North Carolina’s Department of Transportation (DOT) filed the charges against the Nissan of Shelby dealership employees.

The charges include failing to disclose damage, improperly rebuilding salvage titles, failure to inspect vehicles prior to being offered for sale, failure to deliver title, improper use of temporary markers, making false statements about the date of sale, and more.

The agency stumbled upon these misdeeds while looking into the process used by the dealership to rebuild the titles of salvage vehicles. The dealership’s former general manager Sam Kazran was caught with 110 counts of Failure to Inspect Vehicle Prior to Being Offered for Sale.

Another employee, Casey Ramsey, was charged with 38 counts of Failure to Deliver Title, 38 counts of Improper Use of Temporary Markers, four counts of Failure to Disclose Damage, and one count of Making False Statement about the Date of Sale. The other ten employees were charged with a combination of the abovementioned violations.

These charges come after a WBTV investigation earlier this year revealed that Nissan of Shelby had listed totaled cars and flooded vehicles for sale and were sold to unsuspecting customers. WBTV found nearly a dozen cars the dealership either bought or sold at insurance salvage auctions, with many of them ending up for sale on their website.

NSANY’s stock has declined more than 12% over the past month.

NSANY’s association with this controversial dealership would definitely alarm buyers. In this scenario, its peers Stellantis N.V. (STLA), Honda Motor Co., Ltd. (HMC), Ford Motor Company (F), and NIO Inc. (NIO) stand to benefit.

Let’s delve into the fundamentals of these stocks to understand their near-term prospects.

Stellantis N.V. (STLA)

Headquartered in Hoofddorp, the Netherlands, STLA designs, manufactures, distributes, and sells automobiles and light commercial vehicles, engines, transmission systems, metallurgical products, mobility services, and production systems worldwide. It offers its products under the Abarth, Alfa Romeo, Chrysler, DS, Dodge, Jeep, Fiat, Maserati, Ram, Opel, Lancia, Vauxhall, Peugeot, Comau, and Teksid brands.

On July 24, 2023, STLA and Samsung SDI announced that they had signed an MOU to establish a second battery plant in the U.S. under the existing StarPlus Energy joint venture, targeting to start production in 2027 with an annual production capacity of 34 GWh. This supports Stellantis' aim to offer 25 new electric vehicles in North America by the decade's end and move towards carbon neutrality by 2038.

On July 6, 2023, STLA and NioCorp Developments Ltd. announced the signing a Rare Earth Offtake Term Sheet. The Term Sheet envisions a definitive agreement for a 10-year offtake contract for specific amounts of neodymium-praseodymium oxide, dysprosium oxide, and terbium oxide that NioCorp aims to produce at its Elk Creek Critical Minerals Project in southeast Nebraska.

The supply agreement will support STLA’s efforts to build reliable supply chains and achieve its sustainability goals.

In terms of the trailing-12-month EBIT margin, STLA’s 12.46% is 70.1% higher than the 7.33% industry average. Likewise, its 10.40% trailing-12-month net income margin is 149% higher than the 4.18% industry average. Likewise, its 27.85% trailing-12-month Return on Common Equity is 157.4% higher than the 10.82% industry average.

In terms of forward non-GAAP P/E, STLA’s 3.18x is 78.4% lower than the 14.73x industry average. Its 0.27x forward Price/Sales is 68.3% lower than the 0.86x industry average. Likewise, its 0.61x forward Price/Book is 75.4% lower than the 2.48x industry average.

STLA’s net revenues for the six months ended June 30, 2023, increased 11.8% year-over-year to €98.37 billion ($107.02 billion). Its net profit increased 37.2% year-over-year to €10.92 billion ($11.88 billion). Its adjusted operating income rose 11% year-over-year to €14.13 billion ($15.37 billion). The company’s EPS came in at €3.45, representing an increase of 39.7% year-over-year.

Analysts expect STLA’s revenue for the fiscal period ending September 30, 2023, to increase 19.2% year-over-year to $48.94 billion. Its EPS for fiscal 2023 is expected to increase 3.2% year-over-year to $5.70.

Honda Motor Co., Ltd. (HMC)

Headquartered in Tokyo, Japan, HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. It operates through four segments: Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.

On February 28, 2023, HMC and LG Energy Solution held the groundbreaking ceremony for their joint venture EV battery plant spread over 2 million square feet. The facility is scheduled to be completed by the end of 2024, aiming for an annual production capacity of 40 GWh. The JV company will deliver lithium-ion batteries to support HMC’s plan to build battery-electric vehicles (BEV) in North America.

In terms of the trailing-12-month EBITDA margin, HMC’s 13.12% is 21.8% higher than the 10.77% industry average. Likewise, its 4.89% trailing-12-month net income margin is 17% higher than the 4.18% industry average.

On the other hand, its 7.46% trailing-12-month Return on Common Equity is 31.1% lower than the 10.82% industry average. Its 5.38% trailing-12-month EBIT margin is 26.5% lower than the 7.33% industry average.

In terms of forward EV/Sales, HMC’s 0.62x is 46.3% lower than the 1.16x industry average. Its 0.38x forward Price/Sales is 55.9% lower than the 0.86x industry average. Likewise, its 9.97x forward EV/EBIT is 26.4% lower than the 13.55x industry average.

For the first quarter that ended June 30, 2023, HMC’s sales revenue increased 20.8% year-over-year to ¥4.62 trillion ($31.67 billion). The company’s operating profit increased 77.5% year-over-year to ¥394.45 billion ($2.70 billion). Its profit for the period increased 134.1% year-over-year to ¥382.95 billion ($2.62 billion). In addition, its EPS came in at ¥219.06, representing an increase of 151.1% year-over-year.

For the quarter ending September 30, 2023, HMC’s revenue is expected to increase 17.4% year-over-year to $34.09 billion. Its EPS for the fiscal year 2024 is expected to increase 19.2% year-over-year to $3.77.

Ford Motor Company (F)

F develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments.

On August 17, 2023, SK On, EcoProBM, and F announced an investment of C$1.2 billion to build a cathode manufacturing facility that will provide materials that ultimately supply batteries to F’s future electric vehicles. The facility will help the automaker localize critical battery raw material processing in regions where it produces its EVs. Production is slated to begin in the first half of 2026.

F’s 2.44% trailing-12-month net income margin is 41.7% lower than the 4.18% industry average. Likewise, its 8.16% trailing-12-month EBITDA margin is 24.2% lower than the 10.77% industry average. Furthermore, the stock’s 10.34% trailing-12-month gross profit margin is 70.8% lower than the industry average of 35.41%.

On the other hand, the stock’s 4.43% trailing-12-month Capex/Sales is 37.8% higher than the industry average of 3.22%.

In terms of forward non-GAAP P/E, F’s 5.73x is 61.1% lower than the 14.73x industry average. Its 0.29x forward Price/Sales is 66.6% lower than the 0.86x industry average. Likewise, its 1.03x forward Price/Book is 58.4% lower than the 2.48x industry average.

On the other hand, in terms of forward EV/EBITDA, F’s 10.46x is 9.2% higher than the 9.58x industry average. Likewise, its 14.12x forward EV/EBIT is 4.2% higher than the 13.55x industry average.

F’s total revenues for the second quarter ended June 30, 2023, rose 11.9% year-over-year to $44.95 billion. Its adjusted EBIT increased 1.7% year-over-year to $3.79 billion. The company’s adjusted net income increased 6.5% over the prior-year quarter to $2.93 billion. Its EPS came in at $0.72, representing an increase of 5.9% year-over-year.

Street expects F’s EPS and revenue for the quarter ending September 30, 2023, to increase 50.3% and 10.3% year-over-year to $0.45 and $41.01 billion, respectively. The stock has gained 7.2% year-to-date to close the last trading session at $11.87.

NIO Inc. (NIO)

Headquartered in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles. It offers five and six-seater electric SUVs, as well as electric sedans. The company also provides power solutions, including Power Home, Power Swap, Power Charger and Destination Charger, Power Mobile, Power Map, and One Click for Power valet service.

On June 20, 2023, NIO announced that it entered into a share subscription agreement with CYVN Holdings L.L.C. NIO’s founder, chairman, and CEO William Bin Li said, “The strategic investments from CYVN Holdings demonstrate NIO’s unique values in the smart electric vehicle industry.”

“The investment transaction will further strengthen our balance sheet to power our continuous endeavors in accelerating business growth, driving technological innovations, and building long-term competitiveness,” he added.

NIO’s negative 37.01% trailing-12-month EBIT margin compares to the 7.33% industry average. Likewise, its negative 30.74% trailing-12-month EBITDA margin compares to the 10.77% industry average.

On the other hand, the stock’s 13.88% trailing-12-month Capex/Sales is 331.5% higher than the industry average of 3.22%.

In terms of forward EV/Sales, NIO’s 2.17x is 87.1% higher than the 1.16x industry average. Likewise, its 2.18x forward Price/Sales is 154.4% higher than the 0.86x industry average.

For the fiscal first quarter ended March 31, 2023, NIO’s total revenues increased 7.7% year-over-year to RMB10.68 billion ($1.47 billion). Its gross profit declined 88.8% year-over-year to RMB162.29 million ($22.35 million).

Its non-GAAP net loss attributable to ordinary shareholders of NIO widened 222.3% year-over-year to RMB4.14 billion ($570.08 million). Also, its non-GAAP loss per share attributable to ordinary shareholders widened 217.7% year-over-year to RMB2.51.

Analysts expect NIO’s revenue for the quarter ending September 30, 2023, to increase 35% year-over-year to $2.44 billion. 

The Chinese EV Onslaught Commences – Secure Your Position with These 5 EV Stocks

Posted on by The INO.com Team

On August 14, U.S electric mobility major Tesla, Inc. (TSLA) announced a fresh round of price cuts for Model Y and Model 3 in China. This move was soon followed by further price cuts on August 16, in which Model S and Model X prices were reduced by $7,400 and $8,500, respectively.

These moves aimed to boost sales and gain market share by undercutting intense competition from domestic automakers, to whom the auto major lost ground even as it is ramping up production in its Shanghai Gigafactory.

Contrary to this being an isolated incident, carmakers in the U.S. and Europe are once again under siege after ceding ground to Japanese automakers with superior energy efficiency rendered desirable in the aftermath of the oil embargo between 1970 and 1990.

However, this time around, the war is on climate change, the goal is rapid decarbonization and energy transition, the battleground is smart, connected, and electric mobility solutions, and the invaders are from the other side of the Pacific, beyond the Sea of Japan.

Recently, after BYD Company Limited (BYDDY) delivered its five millionth electric vehicle, its founder Wang Chuanfu declared the “time has come for Chinese brands.” And he has good reason to be optimistic. Chinese automakers have access to its vast domestic market, abundant supplies of resources, such as rare earths, which are critical for energy transition, and a government keen on seeing its domestic brands compete globally.

China’s dominance in rare earth and other clean energy metals is back in the limelight after the recent export restriction on germanium and gallium. With the trade war between the U.S. and China intensifying amid restrictions on exports of semiconductor chips and investments in other cutting-edge technology by the former, the latter is expected to keep upping the ante.

This could hurt the prospects of Western car manufacturers as they might be compelled to deal with increased input costs on top of exchange-rate headwinds and credit crunch due to the Federal Reserve ratcheting up the benchmark borrowing cost to 5.25%-5.50% from nearly 0% in a span of 16 months. 

While carbon border tax and other protective measures could provide temporary shelter for besieged Western automakers, the beneficiaries stand to lose more if the Chinese government cuts off their access to the massive domestic market on which the Chinese automakers could always fall back upon encountering turbulence overseas.

In such a circumstance, former Aston Martin chief executive Andy Palmer might be justified in his statement that manufacturers in Europe and the US face a “real and present danger.”

As the adage goes, “If you can't beat them, join them,” here are five stocks that could be worthy of consideration in case the Western defenses do get breached:

BYD Company Limited (BYDDY)

In addition to being a manufacturer and seller of transport vehicles, Chinese automaker BYDDY is also engaged in the manufacture and sales of electronic parts and components and electronic devices for daily use, such as rechargeable batteries and photovoltaic products, mobile phone parts and assembly, and related products.

Over the last three years, BYDDY’s revenue and net income have grown at a 59.8% CAGR, while its EBITDA has grown at a 48.2% CAGR. During the same time horizon, the company’s net income and total assets have grown at 173.3% and 41.9% CAGRs, respectively.

Last year, BYDDY overtook Tesla, Inc. (TSLA) as the world’s top electric car maker, including plug-in hybrids. With its five millionth new energy vehicle (NEV), a DENZA N7, rolling off on August 9, the Chinese auto major is aiming to outpace TSLA on purely battery-powered cars this year.

Here’s the legendary investor Charlie Munger summing up the rivalry between BYDDY and TSLA by commenting, “This carmaker is so ahead of Tesla in China, it's ridiculous.”

On July 14, it was revealed that BYDDY submitted a $1 billion investment proposal to build electric cars and batteries in India in partnership with privately held Hyderabad-based Megha Engineering and Infrastructures.

On July 4, BYDDY confirmed an investment of R$3 billion ($602.97 million) to start operations in three factories simultaneously in the Camaçari complex, 50km from Salvador, Brazil. The company believes that Domestic production will allow for more competitive prices and the possibility for a car-loving population to own an electric vehicle in the garage.

Analysts expect BYD’s revenue and EPS for the fiscal year 2023 to increase by 41.1% and 44.7% year-over-year to $87 billion and $2.40, respectively. Revenue and EPS are expected to increase by 23% and 30.1% year-over-year to $107.20 billion and $3.13, respectively.

Li Auto Inc. (LI)

Headquartered in Beijing, LI designs, develops, manufactures, and sells smart new energy passenger vehicles (NEVs). The company also sells peripheral products and offers related services, such as charging stalls, vehicle Internet connection services, and extended lifetime warranties.

Over the last three years, LI’s revenue has grown at 263.4% CAGR, while its total assets have grown at 115.8% CAGR.

For the fiscal 2023 second quarter that ended June 30, LI’s total vehicle deliveries increased by 201.6% year-over-year to come in at 86,533 units. As a result, vehicle sales and total revenues for the same period increased by 229.7% and 228.1% year-over-year to RMB 27.97 billion ($3.85 billion) and RMB 28.65 billion ($3.94 billion).

LI’s non-GAAP net income was RMB2.73 billion ($375.38 million) in the second quarter of 2023, compared with RMB183.4 million ($25.22 million) non-GAAP net loss in the previous-year quarter.

For the fiscal year 2023, LI’s revenue is expected to increase by 146.3% year-over-year to $16.07 billion, while its EPS is expected to come in at $1.03 compared to $0.01 during the previous fiscal. Revenue and EPS are expected to increase by 53.7% and 50.5% year-over-year to $24.70 and $1.55, respectively.

NIO Inc. (NIO)

Headquartered in Shanghai, NIO designs, develops, manufactures, and sells high-end smart electric vehicles. The company also offers energy and service packages; design and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after-sales management activities.

Over the last three years, NIO’s revenue has grown at an 87.7% CAGR, while its total assets have grown at a 79.9% CAGR.

On August 1, NIO announced the delivery of 20,462 vehicles in July 2023, representing an increase of 103.6% year-over-year. The deliveries consisted of 14,066 premium smart electric SUVs and 6,396 premium smart electric sedans. With this, the cumulative deliveries of NIO vehicles reached 364,579 as of July 31, 2023.

On July 12, NIO announced the closure of a $738.5 million strategic equity investment from CYVN Investments RSC Ltd, an affiliate of CYVN Holdings L.L.C., an investment vehicle majority owned by the Abu Dhabi Government with a strategic focus on advanced and smart mobility.

Going forward, both entities will work jointly to pursue strategic collaborations in international business and technology cooperation.

In addition to ever-narrowing losses, NIO’s revenues for fiscal 2023 and 2024 are expected to increase by 22.9% and 51.6% year-over-year, to come in at $8.82 billion and $13.36 billion, respectively.

 XPeng Inc. (XPEV)

Guangzhou-based XPEV is involved in designing, developing, producing, and selling smart electric vehicles (Smart EVs) that are primarily targeted toward the mid-to-high-end of the passenger vehicle market. Other offerings include supercharging, maintenance, ride-hailing, and vehicle leasing services.

Over the last three years, XPEV’s revenue has grown at a 122.8% CAGR, while its total assets have grown at a 97.7% CAGR.

On August 1, XPEV announced that it had recorded deliveries of 11,008 Smart EVs in July 2023, which indicates a sequential increase of 28% and marks its sixth consecutive month of delivery growth.

On July 26, XPEV announced its strategic partnership with Volkswagen AG (VWAGY). The framework agreement involves strategic technical collaboration and a share purchase agreement for strategic minority investment by the latter for 4.99% of XPEG at $15 per ADS, for a total consideration of approximately $700 million.

With the collaboration, both companies seek to leverage each other’s complementary strengths and forge a long-term win-win partnership.

In addition to ever-narrowing losses, XPEV’s revenues for fiscal 2023 and 2024 are expected to increase by 15.2% and 66.4% year-over-year, to come in at $4.49 billion and $7.47 billion, respectively.

Niu Technologies (NIU)

Beijing-based NIU designs, manufactures, and sells smart electric two-wheeled vehicles. The company is mainly engaged in the design, manufacture, and sales of high-performance motorcycles, scooters, bicycles, and kick-scooters.

Over the last three years, NIU’s revenue has grown at a 13.3% CAGR, while its total assets have grown at a 12.2% CAGR.

On July 4, NIU updated that in the fiscal 2023 second quarter, the company sold 211,996 units, including e-motorcycles, e-mopeds, e-bicycles, kick-scooters, and e-bikes, indicating an increase of 1.5% year-over-year. The number of units sold in China market and international markets were 178,567 and 33,429, respectively.

Consequently, NIU’s quarterly revenue increased by 0.1% year-over-year to RMB 828.8 million ($113.68 million). The company’s gross margin was 23.1%, compared to 20.3% during the previous year's quarter. As a result, its adjusted net income came in at RMB 14.4 million ($1.98 million).

Analysts expect NIU’s revenue for the fiscal year 2023 to increase by 10.2% year-over-year to $507.55 million, while its EPS is expected to increase astronomically to $0.22. Both revenue and EPS are expected to increase by 29.4% and 108.7% year-over-year to $656.55 million and $0.47, respectively.

The Chinese EV Onslaught Commences – Secure Your Position with These 5 EV Stocks

Posted on by Chelsea

On August 14, U.S electric mobility major Tesla, Inc. (TSLA) announced a fresh round of price cuts for Model Y and Model 3 in China. This move was soon followed by further price cuts on August 16, in which Model S and Model X prices were reduced by $7,400 and $8,500, respectively.

These moves aimed to boost sales and gain market share by undercutting intense competition from domestic automakers, to whom the auto major lost ground even as it is ramping up production in its Shanghai Gigafactory.

Contrary to this being an isolated incident, carmakers in the U.S. and Europe are once again under siege after ceding ground to Japanese automakers with superior energy efficiency rendered desirable in the aftermath of the oil embargo between 1970 and 1990.

However, this time around, the war is on climate change, the goal is rapid decarbonization and energy transition, the battleground is smart, connected, and electric mobility solutions, and the invaders are from the other side of the Pacific, beyond the Sea of Japan.

Recently, after BYD Company Limited (BYDDY) delivered its five millionth electric vehicle, its founder Wang Chuanfu declared the “time has come for Chinese brands.” And he has good reason to be optimistic. Chinese automakers have access to its vast domestic market, abundant supplies of resources, such as rare earths, which are critical for energy transition, and a government keen on seeing its domestic brands compete globally.

China’s dominance in rare earth and other clean energy metals is back in the limelight after the recent export restriction on germanium and gallium. With the trade war between the U.S. and China intensifying amid restrictions on exports of semiconductor chips and investments in other cutting-edge technology by the former, the latter is expected to keep upping the ante.

This could hurt the prospects of Western car manufacturers as they might be compelled to deal with increased input costs on top of exchange-rate headwinds and credit crunch due to the Federal Reserve ratcheting up the benchmark borrowing cost to 5.25%-5.50% from nearly 0% in a span of 16 months. 

While carbon border tax and other protective measures could provide temporary shelter for besieged Western automakers, the beneficiaries stand to lose more if the Chinese government cuts off their access to the massive domestic market on which the Chinese automakers could always fall back upon encountering turbulence overseas.

In such a circumstance, former Aston Martin chief executive Andy Palmer might be justified in his statement that manufacturers in Europe and the US face a “real and present danger.”

As the adage goes, “If you can't beat them, join them,” here are five stocks that could be worthy of consideration in case the Western defenses do get breached:

BYD Company Limited (BYDDY)

In addition to being a manufacturer and seller of transport vehicles, Chinese automaker BYDDY is also engaged in the manufacture and sales of electronic parts and components and electronic devices for daily use, such as rechargeable batteries and photovoltaic products, mobile phone parts and assembly, and related products.

Over the last three years, BYDDY’s revenue and net income have grown at a 59.8% CAGR, while its EBITDA has grown at a 48.2% CAGR. During the same time horizon, the company’s net income and total assets have grown at 173.3% and 41.9% CAGRs, respectively.

Last year, BYDDY overtook Tesla, Inc. (TSLA) as the world’s top electric car maker, including plug-in hybrids. With its five millionth new energy vehicle (NEV), a DENZA N7, rolling off on August 9, the Chinese auto major is aiming to outpace TSLA on purely battery-powered cars this year.

Here’s the legendary investor Charlie Munger summing up the rivalry between BYDDY and TSLA by commenting, “This carmaker is so ahead of Tesla in China, it's ridiculous.”

On July 14, it was revealed that BYDDY submitted a $1 billion investment proposal to build electric cars and batteries in India in partnership with privately held Hyderabad-based Megha Engineering and Infrastructures.

On July 4, BYDDY confirmed an investment of R$3 billion ($602.97 million) to start operations in three factories simultaneously in the Camaçari complex, 50km from Salvador, Brazil. The company believes that Domestic production will allow for more competitive prices and the possibility for a car-loving population to own an electric vehicle in the garage.

Analysts expect BYD’s revenue and EPS for the fiscal year 2023 to increase by 41.1% and 44.7% year-over-year to $87 billion and $2.40, respectively. Revenue and EPS are expected to increase by 23% and 30.1% year-over-year to $107.20 billion and $3.13, respectively.

Li Auto Inc. (LI)

Headquartered in Beijing, LI designs, develops, manufactures, and sells smart new energy passenger vehicles (NEVs). The company also sells peripheral products and offers related services, such as charging stalls, vehicle Internet connection services, and extended lifetime warranties.

Over the last three years, LI’s revenue has grown at 263.4% CAGR, while its total assets have grown at 115.8% CAGR.

For the fiscal 2023 second quarter that ended June 30, LI’s total vehicle deliveries increased by 201.6% year-over-year to come in at 86,533 units. As a result, vehicle sales and total revenues for the same period increased by 229.7% and 228.1% year-over-year to RMB 27.97 billion ($3.85 billion) and RMB 28.65 billion ($3.94 billion).

LI’s non-GAAP net income was RMB2.73 billion ($375.38 million) in the second quarter of 2023, compared with RMB183.4 million ($25.22 million) non-GAAP net loss in the previous-year quarter.

For the fiscal year 2023, LI’s revenue is expected to increase by 146.3% year-over-year to $16.07 billion, while its EPS is expected to come in at $1.03 compared to $0.01 during the previous fiscal. Revenue and EPS are expected to increase by 53.7% and 50.5% year-over-year to $24.70 and $1.55, respectively.

NIO Inc. (NIO)

Headquartered in Shanghai, NIO designs, develops, manufactures, and sells high-end smart electric vehicles. The company also offers energy and service packages; design and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after-sales management activities.

Over the last three years, NIO’s revenue has grown at an 87.7% CAGR, while its total assets have grown at a 79.9% CAGR.

On August 1, NIO announced the delivery of 20,462 vehicles in July 2023, representing an increase of 103.6% year-over-year. The deliveries consisted of 14,066 premium smart electric SUVs and 6,396 premium smart electric sedans. With this, the cumulative deliveries of NIO vehicles reached 364,579 as of July 31, 2023.

On July 12, NIO announced the closure of a $738.5 million strategic equity investment from CYVN Investments RSC Ltd, an affiliate of CYVN Holdings L.L.C., an investment vehicle majority owned by the Abu Dhabi Government with a strategic focus on advanced and smart mobility.

Going forward, both entities will work jointly to pursue strategic collaborations in international business and technology cooperation.

In addition to ever-narrowing losses, NIO’s revenues for fiscal 2023 and 2024 are expected to increase by 22.9% and 51.6% year-over-year, to come in at $8.82 billion and $13.36 billion, respectively.

 XPeng Inc. (XPEV)

Guangzhou-based XPEV is involved in designing, developing, producing, and selling smart electric vehicles (Smart EVs) that are primarily targeted toward the mid-to-high-end of the passenger vehicle market. Other offerings include supercharging, maintenance, ride-hailing, and vehicle leasing services.

Over the last three years, XPEV’s revenue has grown at a 122.8% CAGR, while its total assets have grown at a 97.7% CAGR.

On August 1, XPEV announced that it had recorded deliveries of 11,008 Smart EVs in July 2023, which indicates a sequential increase of 28% and marks its sixth consecutive month of delivery growth.

On July 26, XPEV announced its strategic partnership with Volkswagen AG (VWAGY). The framework agreement involves strategic technical collaboration and a share purchase agreement for strategic minority investment by the latter for 4.99% of XPEG at $15 per ADS, for a total consideration of approximately $700 million.

With the collaboration, both companies seek to leverage each other’s complementary strengths and forge a long-term win-win partnership.

In addition to ever-narrowing losses, XPEV’s revenues for fiscal 2023 and 2024 are expected to increase by 15.2% and 66.4% year-over-year, to come in at $4.49 billion and $7.47 billion, respectively.

Niu Technologies (NIU)

Beijing-based NIU designs, manufactures, and sells smart electric two-wheeled vehicles. The company is mainly engaged in the design, manufacture, and sales of high-performance motorcycles, scooters, bicycles, and kick-scooters.

Over the last three years, NIU’s revenue has grown at a 13.3% CAGR, while its total assets have grown at a 12.2% CAGR.

On July 4, NIU updated that in the fiscal 2023 second quarter, the company sold 211,996 units, including e-motorcycles, e-mopeds, e-bicycles, kick-scooters, and e-bikes, indicating an increase of 1.5% year-over-year. The number of units sold in China market and international markets were 178,567 and 33,429, respectively.

Consequently, NIU’s quarterly revenue increased by 0.1% year-over-year to RMB 828.8 million ($113.68 million). The company’s gross margin was 23.1%, compared to 20.3% during the previous year's quarter. As a result, its adjusted net income came in at RMB 14.4 million ($1.98 million).

Analysts expect NIU’s revenue for the fiscal year 2023 to increase by 10.2% year-over-year to $507.55 million, while its EPS is expected to increase astronomically to $0.22. Both revenue and EPS are expected to increase by 29.4% and 108.7% year-over-year to $656.55 million and $0.47, respectively.

4 China Tech Stocks to Get into BEFORE Mid-August Hits

Posted on by The INO.com Team

President Joe Biden plans to sign an executive order to curb critical U.S. technology investments in China by mid-August, according to people familiar with the internal deliberations. The order primarily focuses on semiconductors, artificial intelligence (AI), and quantum computing. It won’t affect any existing investments and will only prohibit certain new transactions.

These so-called outbound investment controls are part of a broader White House effort to limit China’s capabilities to develop next-generation technologies to dominate military and economic security. This includes steps to control the sales of advanced chips and the tools to build them.
The timing of the executive order has slipped multiple times before, and there is no assurance that it won’t be delayed again. However, internal discussions have already shifted from the substance of the measures to rolling out the order and accompanying rule, stated the people familiar who spoke anonymously.

The effort can complicate the Biden administration’s already troubled relations with China, which sees these restrictions as an effort to contain and isolate the nation. Earlier this month, China’s envoy in Washington said that Beijing would retaliate if the U.S. imposed new restrictions on tech or capital flows.

Meanwhile, Treasury Secretary Janet Yellen has tried to calm Chinese anger over the limitations, stating they wouldn’t considerably damage the ability to attract U.S. investment and were narrowly tailored.

“These would not be broad controls that would affect US investment broadly in China, or in my opinion, have a fundamental impact on affecting the investment climate for China,” Janet Yellen commented in an interview with Bloomberg Television.

4 China Tech Stocks to Buy Before Mid-August

JD.com, Inc. (JD) is a leading supply chain-based technology and service provider in the People’s Republic of China. It provides computers, communication, consumer electronics, home appliances, and general merchandise products.

The company provides online marketplace services for third-party merchants, marketing services, and omnichannel solutions to customers and offline retailers. Also, it offers integrated data, technology, business, and user management industry solutions to support the digitization of enterprises.

On July 21, JD Logistics (JDL) and Geopost entered a strategic partnership to strengthen their global logistics capabilities. By leveraging JDL’s solid warehousing network and Geopost’s logistics delivery capabilities, the collaboration would enhance international express services between China and Europe. This partnership should bode well for both companies.

Also, the same day, JD announced a partnership with French luxury group SMCP to launch Sandro, Maje, and Claudie Pierlot flagship stores. This launch should offer JD.com’s nearly 600 customers access to more than 4,000 high-end products from these top-tier brands. Beyond providing products, the partnership with SMCP extends into operations, marketing, and supply chain support.

On July 13, JD introduced ChatRhino large language model (LLM) on its 2023 JDDiscovery tech summit. Combining 70% generalized data with 30% native intelligent supply chain data, the company’s latest AI model provides targeted solutions for real industry challenges across sectors, including retail, logistics, finance, and health. JD’s ChatRhino also sets a new benchmark as a 100-billion-parameter model.

The company’s large language model evolution aligns with its relentless pursuit of technology, encircling the pillars of efficiency, user experience, cost-effectiveness, inclusiveness, and groundbreaking progress.

For the first quarter that ended March 31, 2023, JD’s net revenues were $35.40 billion, up 1.4% from the same period in 2022. Its net service revenues increased 34.5% from the year-ago value to $6.90 billion. The company’s non-GAAP income from operations was $1.10 billion, an increase of 68.1% year-over-year.

Furthermore, non-GAAP net income attributable to the company’s ordinary shareholders for the first quarter was $2.20 billion or $0.69 per ADS, up 90% and 88.1% year-over-year, respectively.

After witnessing strong growth in profitability in the first quarter of fiscal 2023, JD expects to continue its business momentum in the upcoming quarters.

“In the quarters ahead, we will further enhance our business structure in order to drive the expansion of our user base throughout China. JD.com has built China’s most trusted brand in retail, and is uniquely positioned to provide our loyal user base with the superior quality, value, speed and selection they have come to expect, while maintaining the flexibility to seize upon multiple growth opportunities across our businesses,” said Lei Xu, JD’s CEO.

Analysts expect JD’s revenue and EPS for the fiscal year (ending December 2023) to increase 2.9% and 18.4% year-over-year to $154.54 billion and $3.02, respectively. The consensus revenue and EPS estimates of $170.25 billion and $3.55 for the fiscal year 2024 indicate a growth of 10.2% and 17.9% year-over-year, respectively.

The second tech stock investors should consider buying is Baidu, Inc. (BIDU). The company provides internet search services in China. BIDU operates through Baidu Core and iQIYI segments. Its offerings include Baidu App, Baidu Search, Baidu Feed, Baidu Health, Haokan, Baidu Wiki, Baidu Experience, and Baidu Drive. Also, the company offers online marketing services.

On June 16, BIDU obtained licensing for the commercial operation of its fully driverless ride-hailing service in Shenzhen. With this new license, Baidu’s Apollo Go robotaxis would be allowed to operate across 188 square kilometers in Shenzhen from 7 a.m. to 10 p.m. daily. This expansion broadens the scope of BIDU’s commercial, fully driverless ride-hailing service operations nationwide.

On May 4, BIDU Research developed a groundbreaking AI algorithm that significantly drives the stability and antibody response of Covid-19 mRNA vaccines. Such algorithm designs could enhance BIDU’s AI capabilities and provide a competitive edge, boosting the company’s revenue through licensing or commercializing the technology.

Also, on March 16, BIDU launched ERNIE Bot, a next-generation large language model with impressive capabilities in Chinese language and culture comprehension, literary and business writing, mathematical calculations, and multi-modal content creation. By leveraging cutting-edge technology to enhance its products and services, BIDU positions itself for long-term, sustainable growth.

BIDU’s revenues increased 9.6% year-over-year to $4.54 billion during the first quarter that ended March 31, 2023. Its non-GAAP operating income rose 60.9% from the prior-year quarter to $936 million. The company’s adjusted EBITDA grew 48.1% from the year-ago value to $1.19 billion.

In addition, non-GAAP net income to BIDU increased 47.6% year-over-year to $834 million, and its non-GAAP earnings per ADS were $2.34, up 43.5% year-over-year.

According to Rong Luo, CFO of BIDU, “Generative AI represents a new paradigm shift in AI, and Baidu is poised to take advantage of this massive market opportunity. Baidu will continue to invest unwaveringly in this area in the coming quarters.”

Street expects BIDU’s revenue to increase 8.5% year-over-year to $4.65 billion for the second quarter ended June 2023. Likewise, the consensus EPS estimate of $2.39 for the same period indicates a 4.5% year-over-year rise. Also, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

Furthermore, BIDU’s revenue and EPS for the current fiscal year 2023 are expected to grow 6.4% and 12.6% from the previous year to $19.10 billion and $9.63, respectively.

Another prominent Chinese tech stock, NIO Inc. (NIO), should be added to one’s portfolio before mid-August hits. The company is a pioneer and a leading company in the premium smart EV market. It provides five and six-seater electric SUVs and smart electric sedans. Also, NIO offers power solutions such as Power Home, Power Swap, Power Charger, Power Mobile, and Power Map.

On July 12, NIO closed the $738.50 million strategic equity investment from CYVN Investments RSC Ltd, an affiliate of CYVN Holdings L.L.C., an investment vehicle majority owned by the Abu Dhabi Government with a strategic focus on advanced and smart mobility.

After the Investment Transaction and the Secondary Share Transfer, CYVN Investments RSC Ltd owns nearly 7% of the company’s total issued and outstanding shares. NIO and CYVN Entities will work jointly to pursue strategic collaborations in international business and technology cooperation.

On July 1, the company announced its June and second quarter 2023 delivery results. NIO delivered 10,707 vehicles in June. The deliveries comprised 6,383 premium smart electric SUVs and 4,324 premium smart electric sedans. It delivered 23,520 vehicles in the second quarter of 2023. As of June 30, 2023, cumulative deliveries of NIO vehicles reached 344,117.

On June 15, NIO launched the ET5 Touring, a smart electric tourer, and started its deliveries the following day. Designed for family users, the ET5 Touring is crafted with versatile space and inherits the exquisite and dynamic design, high-performance genes, and advanced intelligent features of its sedan variant ET5.

Also, the company commenced delivery ramp-up of the All-New ES8, a smart electric flagship SUV, on June 28, 2023.

During the first quarter of 2023, NIO’s revenues were $1.55 billion, an increase of 7.7% from the first quarter of 2022. The company’s other sales increased 117.8% from the previous year’s quarter to $211.40 million. The increase in other sales was mainly due to the increase in sales of accessories, provision of power solutions, provision of auto financing services, and sales of used cars.

For the fiscal year (ending December 2023), NIO’s revenue is estimated to increase 28.2% year-over-year to $9.20 billion. In addition, analysts expect the company’s revenue for the fiscal year 2024 to grow 48.9% year-over-year to $13.69 billion.

Tech stock Bilibili Inc. (BILI)could also be an ideal buy before the Biden government signs the executive order. BILI provides online entertainment services for the young generations. The company’s platform offers a wide range of content, including video services, mobile games and value-added services, and ACG-related comic and audio content.

For the first quarter that ended March 31, 2023, BILI’s net revenues were $738.20 million, a marginal increase from the same period of 2022. Its revenues from value-added services (VAS) grew 5% from the year-ago value to $314 million, and revenues from advertising were $185.20 million, up 22% year-over-year, primarily attributable to the company’s improved advertising product offering and enhanced advertising efficiency.

BILI’s gross profit for the first quarter increased 37% year-over-year to $160 million, mainly due to reduced revenue-sharing and server and bandwidth costs. As of March 31, 2023, the company had cash and cash equivalents, time deposits, and short-term investments of $2.80 billion.

As indicated by its latest financial results, the company started the first quarter of fiscal 2023 on a positive note, with a notable improvement in its gross profit. Furthermore, BILI will continue prioritizing profitability while fostering a vibrant and highly engaged community for its users and creators in the upcoming quarters.

Analysts expect BILI’s revenue for the third and fourth quarters of 2023 to increase 12.3% and 10.8% year-over-year to $908.37 million and $984.70 million, respectively. Also, the company’s revenue for the fiscal year 2024 is expected to grow 16.8% from the prior year to $3.95 billion.