China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We think by adopting the new strategy to unbind vehicle sales with battery swapping, NIO could broaden its customer base to non-Yangtze-Delta regions and regain price competitiveness.</li>
<li>We upgrade to BUY and raise TP to US$ 10.5, due to 1) recovered growth outlook brought by widened customer base, more competitive pricing and intact model cycle</li>
<li>And 2) smaller-than-feared margin pressure. Our TP implies 2x PS. </li>
</ul>


We think by adopting the new strategy to unbind vehicle sales with battery swapping, NIO could broaden its customer base to non-Yangtze-Delta regions and regain price competitiveness.
We upgrade to BUY and raise TP to US$ 10.5, due to 1) recovered growth outlook brought by widened customer base, more competitive pricing and intact model cycle
And 2) smaller-than-feared margin pressure. Our TP implies 2x PS. 


NIO Inc. (NIO US, BUY, TP US$10.5) Rating Change: Witnessing a Turning Point…UG to BUY

Thematic (Sector/Industry)

<ul>
<li>3690.HK: Douyin gives up on its food delivery GTV target for 2023 (+)</li>
<li>XPEV: XPeng G6 gets over 25k orders 72 hours after pre-sale starts (+)</li>
<li>Nio: NIO cuts car prices by RMB 30k for all models by making battery swapping benefits optional</li>
</ul>


3690.HK: Douyin gives up on its food delivery GTV target for 2023 (+)
XPEV: XPeng G6 gets over 25k orders 72 hours after pre-sale starts (+)
Nio: NIO cuts car prices by RMB 30k for all models by making battery swapping benefits optional


China TMT Update June 13-3690.HK/XPEV/NIO-Douyin Gives up Food Delivery Target,NIO Cut Price,G6 Sale

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>We downgrade NIO’s rating to HOLD from Buy as heightened competition drags its sales growth more severely than expected.</li><li>NIO could face more challenges than its peers when its sales growth slows, amid its heavy investments, including battery swap, chips, mobile phones etc.</li><li>We are of the view that its decision making to cut non-core projects is too slow. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We downgrade NIO’s rating to HOLD from Buy as heightened competition drags its sales growth more severely than expected.NIO could face more challenges than its peers when its sales growth slows, amid its heavy investments, including battery swap, chips, mobile phones etc.We are of the view that its decision making to cut non-core projects is too slow. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

NIO Inc. (NIO US) – Premiumization No Longer Stands for High Margin

<ul>
<li>KE Holding: China State Media call for loosening on purchase restrictions in 1st tier cities (+)</li>
<li>NIO: NIO to launch ET5 Touring on June 15（ +）</li>
<li>JD/ BABA/ PDD: Douyin launches self-operated (1P) ecommerce store (-)</li>
</ul>


KE Holding: China State Media call for loosening on purchase restrictions in 1st tier cities (+)
NIO: NIO to launch ET5 Touring on June 15（ +）
JD/ BABA/ PDD: Douyin launches self-operated (1P) ecommerce store (-)


China TMT Update: Ke/Nio/JD/BABA/PDD-Douyin Launches Self-Operated (1P) Store; Nio's ET5;

<ul>
<li>Tencent/700.HK: new promotional video for "HoK(Honour ok Kings) World" is released</li>
<li>Douyin/Meituan/3690.HK: Last week, the "Douyin Sales Assistant" app was launched</li>
<li>XPEV/1211HK/TSLA/LI/NIO: China to extend purchase tax exemption for NEVs (+/+/+/+/+)</li>
</ul>


Tencent/700.HK: new promotional video for "HoK(Honour ok Kings) World" is released
Douyin/Meituan/3690.HK: Last week, the "Douyin Sales Assistant" app was launched
XPEV/1211HK/TSLA/LI/NIO: China to extend purchase tax exemption for NEVs (+/+/+/+/+)


700.HK/Douyin/3690.HK/XPEV/1211HK/TSLA/LI/NIO: China to Extend Purchase Tax Exemption for NEVs

China

NIO Inc. manufactures and sells automobiles. The Company offers electric vehicles and parts, as well as provides battery charging services. NIO serves customers worldwide.

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NIO (NIO US)

NIO Inc. (NIO US, BUY, TP US$10.5) Rating Change: Witnessing a Turning Point…UG to BUY

We upgrade to BUY and raise TP to US$ 10.5, due to 1) recovered growth outlook brought by widened customer base; and 2) smaller-than-feared margin...

Blue Lotus Research Institute

China TMT Update June 13-3690.HK/XPEV/NIO-Douyin Gives up Food Delivery Target,NIO Cut Price,G6 Sale

3690.HK: Douyin gives up on its food delivery GTV target for 2023 (+)；XPEV: XPeng G6 gets over 25k orders (+)；Nio: NIO cuts car prices by RMB 30k...

Blue Lotus Research Institute

NIO Inc. (NIO US) – Premiumization No Longer Stands for High Margin

We downgrade NIO’s rating to HOLD from Buy as heightened competition drags its sales growth more severely than expected.

CMB International

China TMT Update: Ke/Nio/JD/BABA/PDD-Douyin Launches Self-Operated (1P) Store; Nio's ET5;

KE Holding: China State Media call for loosening on purchase restrictions (+)；NIO: NIO to launch ET5 Touring on June 15（+）；JD/ BABA/ PDD: Douyin...

Blue Lotus Research Institute

700.HK/Douyin/3690.HK/XPEV/1211HK/TSLA/LI/NIO: China to Extend Purchase Tax Exemption for NEVs

Tencent/700.HK: new promotional video for "HoK World" is released/ 3690HK: the "Douyin Sales Assistant" app was launched (-)/XPEV/1211HK/TSLA/LI...

Blue Lotus Research Institute

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