NIO (NYSE: NIO) Is up Around 6% Today on Securing a New $1.5 Billion Credit Line From a Consortium of Chinese Banks

Jul 10, 2020
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NIO (NYSE:NIO), the Chinese EV manufacturer, is currently perched on a seemingly endless ramp up to the stratosphere, bolstered by record June delivery numbers and fresh injections of liquidity. Today, the company formalized another avenue of liquidity by securing a $1.5 billion credit line from a consortium of Chinese banks.

As per the details, 6 Chinese banks – Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, China I Industrial Bank, and China Merchants Bank – will collectively extend a credit line worth RMB 10.4 billion or $1.5 billion in order to support NIO’s business operations. Moreover, these banks will also offer NIO a host of ancillary services such as supply chain financing, auto financing and leasing, etc.

NIO (NYSE: NIO) To Redeem 8.6 Percent of the Equity Interest in NIO Anhui Held by Hefei Strategic Investors

Year to date, NIO has raised significant amounts of financing. As an illustration, toward the end of June, NIO (Anhui) Holding Co. Ltd. – the EV giant’s holding company – disclosed that it had already received RMB 4.8 billion in funding out of a total expected cash injection of RMB 5 billion, with the residual RMB 200 million expected to materialize by September 2020. Moreover, NIO also remains active in the equity markets. For instance, the company revealed in a filing back in June that Tencent Holdings bought 1.68 million ADS (American Depository Shares) via a secondary share offering, raising Tencent’s total stake in the company to 15.1 percent.

Of course, the sentiment around NIO has been fairly effervescent of late as the company continues to ramp up deliveries. As an illustration, the company has recorded very healthy growth in Q2 deliveries, registering an annual increase of 190.8 percent and culminating in the delivery of 10,331 EVs. In June alone, NIO delivered 3,740 EVs, consisting of 2,476 ES6s and 1,264 ES8s, thereby, establishing a new monthly record. What is even more astonishing is the fact that these gains are being accumulated in a macroeconomic environment that is far from ideal and scarred by the financial retrenchment associated with the ongoing coronavirus (COVID-19) pandemic.

As of 09:16 a.m. ET, NIO shares are up 5.7 percent to $15.40 in the pre-market. Year to date, the stock has registered a gain of 313.98 percent! Incidentally, this price level corresponds to a market cap of over $17 billion. We noted yesterday that this epic surge has naturally stretched NIO’s valuation metrics with respect to its peers, raising concerns of a significant pullback. For now, however, NIO continues to rocket higher.

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