According to Zhitong Finance APP, CICC published a research report stating that NIO-SW (09866) currently trades at 0.7x P/S for 2026 on both US and Hong Kong markets. The firm maintains its 2025 adjusted net profit forecast and, considering the company's strong product cycle, raises 2026 Non-GAAP net profit forecast to RMB 5.43 billion, maintaining an outperform industry rating. Given the company's robust product cycle and expected full-year profitability turnaround in 2026, CICC raises Hong Kong and US stock target prices by 51%/52% to HK$68/US$8.8 respectively, both corresponding to 2026 1.0x P/S, representing 33%/38% upside potential from current stock prices.

CICC's main points are as follows:

2Q25 Results Meet Market and Firm Expectations The company announced 2Q25 results with revenue of RMB 19.0 billion. The company's gross margin performance remained steady with effective cost control, and results met both market and firm expectations.

Results Meet Market Expectations with Steady Gross Margins and Effective Cost Control The company delivered 72,056 vehicles in 2Q25, up 71.2% sequentially, driving revenue of RMB 19.0 billion. Overall gross margin increased 2.3ppt sequentially to 10%, while automotive gross margin rose 0.1ppt sequentially to 10.3%. Other business gross margin turned positive to 8.2% (mainly due to steady growth in technology service revenue and continued loss reduction in battery swapping operations). The company maintains guidance that subsequent models, given stable pricing combined with improved platform capabilities and cost reduction in chip procurement, will achieve gross margins exceeding 20% for some models.

2Q R&D and selling & administrative expenses were RMB 3.01 billion and RMB 3.97 billion respectively, continuing sequential declines, driving overall expense ratio down 26.3ppt sequentially. Overall, the company's 2Q gross margin performance remained steady with effective cost control, meeting both market and firm expectations.

Strong Product Cycle Continues, 4Q Monthly Sales Expected to Exceed 50,000 Units For 3Q25, the company plans to deliver 87,000-91,000 vehicles, setting a new quarterly delivery record. During this earnings call, the company guided that driven by a strong product cycle, the ONVO L90 and new ES8 models are expected to gradually achieve monthly production and sales levels exceeding 15,000 units starting in 4Q, striving to achieve gross margin levels above 20%, driving the company to continuously break through monthly deliveries of 50,000 units in 4Q. Total 4Q sales are expected to exceed 150,000 units, achieving overall gross margin levels of 16-17% and Non-GAAP profitability turnaround.

Looking ahead to 2026, the company's existing NT2.0 models are expected to support sales recovery through recent adjustments including standard 100kWh battery packs. The firm believes the company's 2026 sales growth momentum remains strong.

The firm believes that after the company formally launched internal CBU (Cell Business Unit) reforms, operational and organizational efficiency, and model market competitiveness continue to improve, and the firm expects to see gradual optimization in expense efficiency going forward.

Targeting Full-Year Positive Free Cash Flow, Launches World Model The company believes that after delivery of iterative and new products, sales and cash flow are expected to gradually get on track starting from 2Q. Driven by a strong product cycle, the company guides that operating cash flow will continue to improve, with full-year free cash flow expected to achieve positive inflow.

On May 30, the first version of NIO World Model (NWM) officially began rollout. The company adheres to safety-first principles, achieving comprehensive upgrades in technical capabilities and user experience across four major scenarios: active safety, highway pilot, urban pilot, and intelligent parking, fully demonstrating the model's characteristics of stable foundation and high ceiling technical features.