Business News

According to an analyst, dual-listings should protect against de-listing in the United States

Fears of delisting in the United States for equities that do not comply with US auditing standards have been looming over Chinese stocks for some time. However, on Thursday, the Securities and Exchange Commission (SEC) released a list of 80 businesses that could face the cull, sending several of their shares down.

Shares of Nio (NIO), a Chinese electric vehicle manufacturer, fell 15%, adding to the losses; shares are now 50% in the red in 2022.

However, Nio followed up with some good news, which may help to sweeten the pill a little.

The company declared its intention to list on the Singapore Exchange’s main board as a secondary listing. The SGX-ST has granted Nio conditional eligibility, and NIO shares will be completely fungible with its ADR (American depositary receipt) shares once the Singapore listing is completed.

Tim Hsiao of Morgan Stanley believes that this will “likely alleviate investor concerns.”

“NIO’s dual-listings in HK and SG, with full fungibility, should meaningfully hedge any potential US de-listing interruption to operations and capital availability,” the analyst noted. “With NIO’s secondary HK listing due to be converted to its primary listing in a year or two, we believe the SG listing will help NIO gain traction by widening its investor base,” says the analyst.

Nio’s problems, on the other hand, have not been limited to issues with US regulators. Sales fell by 49 percent month over month to 5,074 units in April, a drop of 29 percent year over year. In some ways, investors already knew what was coming because supply chain hitches involving prior Covid-19 lockdowns had a significant influence on production and delivery. Hsiao, on the other hand, believes that near-term execution will be critical in keeping investors on board.

“While lower April sales should have been expected, investors will be watching the restart progress following China’s May holidays, which is key to NIO’s ET7 ramp-up rate and the timing of a prospective face-lift for its incumbent SUV model,” the analyst said.

Hsiao is bullish on Nio, maintaining an Overweight (Buy) rating and a $34 price target. There‚Äôs upside of 121 percent from current levels. (Click here to see Hsiao’s track record.)

The average target on Wall Street is considerably higher, at $40.51, implying 163 percent gains in a year. The Strong Buy consensus rating, which is based on 14 Buys vs. 2 Holds, reflects this optimism. (See TipRanks’ Nio stock outlook.)

Visit TipRanks’ Best Stocks to Buy, a newly created tool that combines all of TipRanks’ equity analytics, to get good recommendations for stocks trading at reasonable prices.

Disclaimer: The views stated in this article are solely those of the analyst featured. Only informational purposes are meant for the content. Before making any investment, it is critical to conduct your own research.

About the author


Kathy Lewis

Kathy Lewis is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for writing, she loves writing for almost all the sections of Editorials99.

Add Comment

Click here to post a comment