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Stock Pick of the Week with Momentum Securities: 08 April - NIO

08 April 2021 Momentum Securities

Momentum’s leading stockbroking division – Momentum Securities – will be bringing you their Stock Pick of the Week, each week on a Wednesday or Thursday. The stock pick motivation is available as written content and a downloadable video and audio clip.

This week’s pick: NIO
About: NIO is a Chinese automobile manufacturer headquartered in Shanghai, specializing in designing and developing electric vehicles. NIO designs, develops, manufactures and sells premium smart electric vehicles, driving innovations in autonomous driving, digital technologies, electric powertrains and batteries.

Portfolio Manager for Momentum Securities, Serfaas Badenhorst shares his insight on NIO.

Click here to download:

• the audio clip
• the video clip.

The company on our radar for this week is none other than NIO, the electric motor vehicle manufacturing company based in Mainland China.

Our FactSet consensus, which is made up of some of the leading research houses in the world, sits an implied return of more than 50% on this company. The electric vehicle market currently forms about 5% of the total vehicle market in China, and the Chinese government has set the goals that by 2025, electric vehicles should make up 25% of all vehicles sold in the mainland China.

In March, NIO delivered more than 7000 250 vehicles. That is a year-on-year increase of more than 370%, although most of the sales are based in Mainland China and Hong Kong, NIO also recently expanded to the United States of America, as well as some European countries. Yet today, the share price is down close to 30% and that's basically due to the fact that there was a chip shortage, which led to some production constraints.

NIO is greatly poised to benefit from future incentives, both by the Chinese government as well as the world moving towards a greener type of motor vehicle and that is why our Stock pick of the week is NIO.

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Covid-19 may accelerate certain industry trends. What are we likely to see?

ANSWER

Adoption of contactless technologies and digital experiences will likely be accelerating emerging technologies further
The consumer will expect safety and precautionary measures, driving the need for enhanced surveillance policies and technologies, which may pose potential privacy concerns
Rising activism among consumers and employees could drive an increased focus on corporate purpose
Value chain disruption is likely to lead to an increase in creative partnerships, which may in turn cause organisations to further invest in developing the mindset and agility to collaborate across sectors in the ecosystem
Cost management will be a critical priority to ensure business continuity based on cash flow requirements, to manage lower margins and revenues during a downturn
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