The team gave Nio shares traded in Hong Kong a six-month price target of HK$200 ($25.6), implying a 38 percent upside.

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Chinese brokerage Northeast Securities initiated coverage on Nio (NYSE: NIO, HKG: 9866) in a research report issued Thursday, expecting the company to be profitable for the first time in 2023.

The team gave Nio a Buy rating and a six-month price target of HK$200 ($25.6) for its Hong Kong-traded shares.

Nio closed up 2.7 percent to HK$145 in Hong Kong on Thursday, and that target price implies about 38 percent upside.

Since the second half of last year, Nio's deliveries have suffered in recent months due to issues including the Covid pandemic and supply chain shortages, the team noted.

Part of the factor affecting the company's deliveries in February came from the shutdown of its factories during the Chinese New Year, and part of the reason is that it is currently on the eve of deliveries of the ET7 and ET5, with some consumer demand flowing to the upcoming new models, the team said.

"We see the current transition phase of Nio's product cycle and the performance of the new ET5+ET7+ES7 portfolio as the decisive factor for its new cycle," the team said.

Nio's ET7 and ET5 will both be equipped with the Nio Aquila super-sensing system as well as the Nio Adam supercomputing platform, allowing for their continued increase in intelligence, according to the team.

Nio will announce its financial results for the fourth quarter and full year of 2021 next Friday Beijing time, and Northeast Securities expects the company to report a net loss attributable to the parent company of RMB 6.909 billion in 2021.

Although the company is still in the red, it has a strong growth profile, the team said.

The team expects Nio to post a net loss of RMB 2.82 billion in 2022, but will achieve a net profit of RMB 545 million in 2023.

As of press time, Nio's shares traded in Hong Kong rose 4.14 percent to HK$151.