Bocom International has released a research report maintaining a Buy rating on NIO-SW (09866) with a target price of HK$65.83. The core significance of this quarter is that NIO has transitioned from a sales recovery phase into an operational validation stage characterized by improvements in average selling price (ASP), stable gross margins, and a contraction in the expense ratio. In the short term, the fulfillment of the Q2 2026 guidance hinges on the ramp-up in June deliveries and the conversion of orders for the ES9 and L80 models. In the medium term, market focus will shift more towards the proportion of high-margin vehicle models, the ability to sustain the target vehicle gross margin of 17%–18% amid cost pressures, and the continuity of Non-GAAP operating profit. If the ES9, the five-seat version of the ES8, and the Onvo L80 continue to meet expectations, the key to the company's valuation reassessment will turn towards the continuity of operating profit and the visibility of cash flow. Bocom International's main points are as follows:

NIO's Q1 2026 results were significantly better than market expectations. NIO delivered 83,465 vehicles in Q1 2026, a year-on-year increase of 98.3%. Revenue reached RMB 25.533 billion, up 112.2% year-on-year. Vehicle sales revenue was RMB 22.784 billion, an increase of 129.2% year-on-year. Non-GAAP adjusted operating profit was RMB 67 million, with an adjusted net profit of RMB 44 million. Based on vehicle sales revenue divided by deliveries, the Q1 2026 vehicle ASP was approximately RMB 273,000, up 15.6% year-on-year and 7.8% quarter-on-quarter.

The improvement in profitability was not solely driven by increased sales volume but was jointly propelled by a higher proportion of the high-margin ES8 model, rising ASP, and strengthened expense discipline. R&D expenses were RMB 1.885 billion, down 40.7% year-on-year and 7.0% quarter-on-quarter. Selling, general, and administrative (SG&A) expenses were RMB 3.497 billion, a decrease of 20.5% year-on-year and 1.1% quarter-on-quarter. The combined total of these two expense categories was RMB 5.382 billion, a reduction of approximately RMB 2.2 billion year-on-year.

Vehicle gross margin was 18.8%, an increase of 8.6 percentage points year-on-year and 0.7 percentage points quarter-on-quarter. Gross margin for other sales reached 20.6%, a four-year high, reflecting improved profitability in service, energy, and community-related businesses. Revenue was largely in line with market expectations, and the quality of profitability was better than previously feared by the market.

Management guidance for Q2 2026 is for deliveries of 110,000 to 115,000 vehicles, representing year-on-year growth of 52.7% to 59.6%. Revenue is projected to be between RMB 32.777 billion and RMB 34.436 billion, a year-on-year increase of 72.4% to 81.2%. This corresponds to a Q2 2026 vehicle ASP of RMB 265,000 to RMB 266,000, remaining robust. Regarding the delivery cadence, the Q2 guidance implies that a total of 80,644 to 85,644 vehicles still need to be delivered in May and June combined, averaging 40,322 to 42,822 vehicles per month. This represents an increase of approximately 37% to 46% compared to April's level. If May's deliveries are close to April's level, then June would require deliveries of approximately 51,000 to 56,000 vehicles, representing an increase of about 75% to 92% compared to the average of April and May. Therefore, the new vehicle ramp-up in June is key to fulfilling the guidance.

Catalysts include the launch and delivery of the ES9 on May 27, volume ramp-up of the Onvo L80, the launch of the five-seat ES8 in the second half of the year, and the NIO World Model upgrade in June. Key risks include price wars, rising costs for raw materials/memory/battery materials, per-vehicle cost pressure exceeding RMB 10,000, and slower-than-expected brand awareness building for the Onvo brand.