CICC has released a research report stating that the current valuations for NIO Inc. (NIO.US) on the US market and NIO-SW (09866) on the Hong Kong market correspond to a 2026 price-to-sales (P/S) ratio of 0.7x. The firm maintains its Outperform industry rating. It also maintains target prices of HK$61.5 for the Hong Kong-listed shares and US$8 for the US-listed shares, corresponding to a 2026 P/S ratio of 1.1x. This implies potential upside of approximately 43% from the current share price for both listings. CICC's key points are as follows:

The company's first-quarter 2026 performance exceeded CICC's expectations. Revenue reached RMB 255.3 billion, a year-on-year increase of 112.2%. Non-GAAP net profit was RMB 0.43 billion, turning profitable year-on-year. The improvement was driven by a sequential increase in gross margin and a significant decrease in expenses.

The ES8 model drove high sales growth and gross margin optimization, while non-automotive business gross margin reached a record high. In Q1 2026, the company delivered 83,465 new vehicles, a 98.3% year-on-year increase, with 45,185 units being the ES8 model. The automotive business gross margin was 18.8%, up 8.6 percentage points year-on-year and 0.8 percentage points sequentially. CICC attributes this primarily to an optimized product mix, while raw material inventory partially offset cost inflation pressures. The gross margin for other businesses increased by 8.8 percentage points sequentially to 20.6%, mainly due to higher payment rates and profit margins in after-sales and peripheral services, alongside sustained growth in the operational efficiency and benefits of the energy business. In Q1 2026, R&D expenses were RMB 18.9 billion, down 40.7% year-on-year, while SG&A expenses were RMB 35.0 billion, down 20.5% year-on-year, with corresponding expense ratios declining.

The Q2 2026 delivery guidance is positive, and the mass adoption of the Shenji chip is expected to enhance intelligent driving efficiency. The company forecasts Q2 2026 sales volume to be between 110,000 and 115,000 vehicles, representing year-on-year growth of 52.7% to 59.6%. Revenue guidance is set at RMB 327.8 billion to RMB 344.4 billion, indicating year-on-year growth of 72.4% to 81.2%. CICC expects the ES8 to maintain steady sequential sales in Q2, with the L80 and ES9 models likely contributing incremental volume. Monthly deliveries are anticipated to return to peak levels by the end of Q2. Regarding intelligent driving, the mass production and installation of the new Shenji chip have improved the standardization of intelligent driving hardware. CICC expects this to enhance the efficiency of intelligent driving R&D and looks forward to OTA version updates optimizing the intelligent driving experience.

Multiple measures are expected to ensure relatively stable gross margins, and the annual trend of declining expenses is likely to continue. On gross margins, considering rising costs for batteries, bulk raw materials, and memory chips, CICC anticipates that increased sales volume of high-end models and collaborative cost reductions across the supply chain should help maintain stable vehicle gross margins in Q2. With a growing user base and normalized high operational efficiency, non-automotive businesses are expected to sustain high gross margins. On the expense side, the company expects that the intensive launch of new models may lead to a sequential increase in sales and marketing expenses in Q2, but overall annual expense deployment is considered manageable. These factors collectively support the expectation of achieving positive non-GAAP profitability for the full year.

Risks include costs not being passed through as expected and new vehicle sales falling short of expectations.