BOCOM INTL: Maintains NIO-SW (09866) target price of 62.7 Hong Kong dollars. Rating "Buy". Positive cash flow indicates strong guidance.

BOCOM INTL issued a research report stating that it maintains a Hong Kong stock target price of HK$62.7 for NIO-SW (09866) and a US stock target price of US$8, with a "buy" rating. Given the strong gross margin performance in the third quarter of 2025 and the historically high guidance in the fourth quarter, the bank maintains its judgment on NIO as a "multi-brand, high-growth" cycle. It maintains a forecast of approximately 340,000 vehicles sold in 2025 for the full year and believes that previous market concerns have eased with the repair of gross margin and positive cash flow. NIO's third-quarter performance was strong, operating cash flow turned positive, and the balance sheet was repaired. NIO's total revenue in the third quarter reached RMB 21.79 billion, an increase of 16.7% year-on-year and 14.7% quarter-on-quarter, at the upper limit of the previous guidance range. Thanks to continued optimization of supply chain costs and reductions in component costs, the gross margin of complete vehicles in the third quarter significantly improved to 14.7% (compared to 10.3% in the second quarter), and the comprehensive gross margin rose to 13.9%, reaching a new three-year high. The company's fourth-quarter guidance is to deliver 120,000-125,000 vehicles (a year-on-year increase of 65%-72%) and revenue of RMB 32.76-34.04 billion. With sales volume doubling, management clearly stated that the new ES8 and L90 models, which benefit from high gross margins, are expected to further increase the gross margin for complete vehicles to around 18% in the fourth quarter. Looking ahead to 2026, the company will enter a strong product cycle, planning to launch three new large SUV models to form a high-end product matrix of "5 large vehicles." The company aims to achieve adjusted profitability and a stable gross margin for complete vehicles at 20% or above for the full year 2026. In terms of overseas markets, it will fully transition to a "partner" model to reduce capital expenditure, while establishing a chip joint venture company to open up its self-developed capabilities and explore new pathways for technology monetization.