Text: Tan Qing said AI Author: Zheng Kai
NIO is on the table.
On March 3, some netizens publicly posted that they were tried to rape by a male colleague in the first month of joining NIO, and then the male colleague had been imprisoned for rape, but he was refused to be retained by HR on the grounds of "risk" and "affecting the company's image". The next day, NIO responded that it had zero tolerance for any illegal crimes and sexual harassment and would thoroughly investigate.
Although the response came quickly and the official attitude was clear, from the point of view of time, it was NIO's spring supplementary recruitment and internship program recruitment, coupled with the release of the financial report, the company's image was inevitably damaged.
On March 5, the person concerned spoke out again, hoping that NIO would admit that there had been neglect and mishandling in previous workplace sexual harassment incidents, and sincerely apologize for this. In addition to NIO's official response, Li Bin has not been seen on social media to respond to the matter, and Li Bin's Weibo comment section in December last year has been attacked by various doubts.
When the financial loss meets the "scandal", in both business and moral dimensions, NIO is experiencing a new storm.
Financial report losses, sexual assault scandals, which one does Li Bin care about more?
NIO's recent "turmoil" is a bit much, first to some models to reduce the price promotion, which attracted criticism, and then rumors that "Jianghuai Weilai stopped production", a momentary uproar. Coupled with the recent turmoil, the NIO brand department is busy.
For Li Bin, these may not be the most important.
Values are important, but whether you can earn real money may be what the capital market is concerned about. After all, after many years of listing, profitability has always been a hurdle that NIO needs to pass.
Tianyancha APP information shows that NIO was listed on the US stock market in 2018 and Hong Kong stock market in 2022, and has gone through multiple rounds of financing, and after the secondary listing, it also needs more profits to return investors.
In 2022, the answer sheet handed over by Li Bin and NIO is not good-looking.
The company's annual revenue was 49.269 billion yuan, a year-on-year increase of 36.3%. At first glance, the growth rate is not slow, but the problem is that it is still loss-making. The net loss in 2022 was 14.437 billion yuan, a year-on-year increase of 259.4%. Increasing income without increasing profits seems to have become a "curse".
Profitability is weighed down by high R&D expenses and selling expenses.
Under GAAP, the company's research and development expenses were 10.8 billion yuan, and sales and general administrative expenses were 10.5 billion yuan. In other words, marketing + R&D accounted for 43% of revenue. Compared with the R&D investment of 4.5 billion yuan in 2021, NIO's R&D expenditure will suddenly increase to more than 10 billion yuan in 2022, and it seems abnormal for short-term growth to be so high.
From the data of 5 years, the R&D expenditure in previous years did not exceed 5 billion. Sales expenses did not exceed 7 billion, and expense growth was relatively stable.
In 2022 alone, NIO has built new domestic and foreign R&D entities such as the Berlin Innovation Center in Germany, the AI and Autonomous Driving R&D Center in Singapore, the Budapest Energy R&D Center in Hungary, the Shenzhen R&D Center and the Hangzhou R&D Center.
With so much investment in R&D, it may mean that NIO is still looking for its core technological competitiveness.
Increasing investment in technology shows that NIO wants to make up for its shortcomings in technology. However, it is one thing to burn money for R&D, but the cost-effectiveness ratio of R&D investment is another.
Taking autonomous driving technology as an example, NOP+, which was originally planned to be capped in 2022, was delayed by 6 months before it began to push the beta version to users. That is to say, investing so much, there is also a lot of uncertainty, and it also drags down profits.
The financial report shows that the net profit in 2022 will increase by -259.40% year-on-year, and the net profit will be negative for 5 consecutive years.
Overall, gross margin also slipped from 18.9% to 10.4%. The gross margin of automobile sales has continued to decline in the last three quarters, and it was 20.1% in 2021 and 13.7% in 22 years
From the financial report, the main reason for the impact on gross margin is the increase in costs. In the financial report, NIO attributed the impact on gross profit operations to the reduction in technology platform upgrade deliveries and model-related inventory provisions; Equipment depreciation, etc.
Taking the fourth quarter as an example, inventory provisions, equipment depreciation and purchase losses amounted to 980 million yuan.
However, the gross profit has fallen so much, probably more because the car is not selling, it is worth noting that although sales are still growing, the sales margin is decreasing.
This shows one thing, the car is harder to sell than it was.
How hard is it to sell? Selling a car loses more than 110,000. The loss for the whole year of 2022 is 14.437 billion yuan, and based on last year's 122486 vehicles, NIO loses 117,800 yuan for every car sold.
What's more, the gross profit margin of selling cars is lower than before.
For the full year, gross profit was 5.1 billion yuan, down 24.6% year-on-year, compared with 6.8 billion yuan in the same period last year. At the same time, the cost of sales for the full year of 2022 was 44.1 billion, an increase of 50.5% year-on-year. The fourth quarter saw the most significant increase, with cost of sales of RMB15.44 billion in the fourth quarter, up 88.3% year-on-year
The growth in inventories also seems to indicate this.
On the balance sheet, the company's inventory also increased by nearly 5 billion, from 3.36 billion in the middle of the year to 8.19 billion at the end of the year, and the corresponding cash and equivalents also decreased by about 5 billion compared to the 2022 interim report.
In the view of Tan Qing AI, the impact of the reduction in gross profit margin may be more far-reaching, because the advantage of new cars over the core of traditional car manufacturing is actually high gross profit.
For NIO, the early construction of production lines, the construction of R&D sales systems, and brand marketing costs, these spent money need to be earned back through high gross profits, if the gross profit margin is not tight, the core advantages over traditional automobile manufacturers may be gone. Capital market valuations may also be strained.
Gnawing the "hard battle" of profit, where is NIO's hole card?
Thankfully, aside from losing money, the company doesn't have much risk on the balance sheet. Although the asset-liability ratio is a bit high, to 71.28%, this debt ratio is actually not very outrageous in the stage of rapid expansion of asset-heavy enterprises.
In terms of short-term liabilities, the spot part of short-term borrowings + long-term borrowings totaled 7.3 billion at the end of 2021 and 5.27 billion in 2022, short-term liabilities have been reduced, plus there are more than 20 billion in cash on hand, there is not much risk. In addition, it is worth noting that the balance sheet shows that NIO still has 19.171 billion financial assets, which can also be used to repay debts after being realized.
For the current NIO, Li Bin may be concerned about whether he can gnaw the "hard bone" of profit next.
The question that NIO needs to solve is, will high-end brands really be "in name"? Under the current situation of continuous decline in gross profit margin, can the hole cards in hand be turned over? This question still needs data to answer.
According to the retail data of China Automotive Center, NIO, China's high-end electric vehicle market with a transaction price of more than 300,000 yuan, ranked first, with a market share of 54.8%, and the high-end electric vehicle market with a market share of more than 400,000 yuan reached 75.8%.
High-end has always been NIO's brand tonality and positioning, and it is also the strategy that NIO has set from the beginning. And Li Bin's hole card may lie in the replacement of the new car.
The models that support NIO's revenue and gross profit, the ES8, ES6 and EC6, are reaching the end of their life cycle, and NIO needs new pillars to support future profitability.
At the earnings call meeting, Li Bin gave answers to investors' concerns. He said that next, NIO will officially complete the switch of all its products from the NT 1 platform to the NT 2 platform, and the new generation of ES6 that appeared on the product announcement of the Ministry of Industry and Information Technology will be launched.
In addition, the new ES8, EC7, EC6, and the rumored Hunter ET5 will bring new growth. Obviously, in the product line, NIO has chosen a new strategy of attacking at multiple points and starting from market segments.
Qin Lihong, president of NIO, once mentioned such a view, to the effect that the product replacement of new car companies is similar to cornering, and it is necessary to preempt other new competitors through facelifts.
The replacement of new cars is indeed an opportunity for impulse, and the market may still have little time for NIO.
On the one hand, from the perspective of annual cumulative deliveries, the KPIs of the three car companies "Wei Xiaoli" have not been achieved.
NIO plans to deliver 150,000 vehicles annually, and 122486 units are actually delivered, with a completion rate of 81.66%. The sales target planned at the beginning of the year was 200,000 units, but it was lowered to 170,000 units in the middle of the year, and the small target was "250,000 units and 300,000 units", and 120757 units were actually delivered.
On the other hand, players such as Qianjie, Extreme Krypton Nezha, and Zero Run are also catching up. The traditional "three families" pattern is also changing.
The market is changing, the industry is also changing, how to face the competition of competitors, while ensuring the competitiveness of products while improving gross margin, this may be a problem that NIO has to face.
However, judging from the reaction of investment banks, each company also has its own views on the annual report released by NIO.
JPMorgan reported that NIO's fourth quarter performance in the fourth quarter of last year was weaker than market expectations due to a sharp contraction of 6.8% in auto margins and higher-than-expected operating expenses.
Credit Suisse, another international investment bank, believes that although quarterly sales reached a record high, NIO's loss in the fourth quarter of last year also hit records, underperforming expectations, and the gross margin of the automotive business was only 6.8%, which is also the lowest point in the past ten quarters. Credit Suisse also lowered its price target to $15.70.
The trend in the secondary market may be more attitude.
As of March 7, premarket Eastern time, NIO's share price fell to $9.3, at a one-year low, and Hong Kong stocks, as of the close of March 7, NIO's share price fell to HK$72.4, with a turnover rate of only 0.04%.
Next, how NIO's road to turnaround continues, we will see.
Reference Articles:
NIO's losses doubled in 2022: the "image gate scandal" was uproar, and it was bearish by many investment banks - Harbor Business Watch
Lose 117,800 for every car sold! Where is NIO's "future"? ——Kanmi Finance
Where did NIO's money go? ——Financial magazine
NIO "Li Bin Supremacy" - Zero State LT
Dangerous NIO - Delin Society
Disclaimer: This article is based on the company's statutory disclosure and public information, but the author does not guarantee the completeness and timeliness of the information. In addition: the stock market is risky, and you need to be cautious when entering the market. The article does not constitute investment advice, and investment must be determined by oneself.