Morgan Stanley has released a research note indicating that the management of NIO-SW (09866) has reaffirmed its commitment to drive profit growth through a combination of higher sales volume and operational leverage. The company has also reiterated its goal of achieving adjusted profitability on a non-GAAP basis within this year. The investment bank has assigned an "Overweight" rating to NIO's H-shares, with a price target of HK$68.5.

According to the report, the company anticipates stabilizing its vehicle gross margin at approximately 18% by enhancing operational efficiency. Concurrently, it expects that sales, general, and administrative expenses as a percentage of revenue will decrease to between 10% and 11% in the second half of the year, with a longer-term target of falling below 10%. Non-GAAP research and development expenditures are projected to remain steady at roughly RMB 2.5 billion per quarter.

The bank also noted that the financing pressure on NIO-SW's balance sheet has been alleviated. It forecasts that the company's cash and cash equivalents will exceed RMB 60 billion in the third quarter and will surpass RMB 70 billion next year. Furthermore, the battery swap business is expected to approach a break-even point within the next three years.