In major news on Hong Kong stocks, Chinese electric vehicle (EV) maker Nio Inc. (HK:9866) (NYSE:NIO) is lending its technology and know-how to British startup Forseven Ltd. Nio has entered into a Technology License Agreement with Forseven and will receive license fees in exchange. 9866 shares rose 4.5% on the news in early trade this morning.
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Nio is one of the leading manufacturers of premium smart EVs in China. It also engages in technological advancements toward driving innovation in EVs, autonomous driving, and artificial intelligence (AI).
Meanwhile, Forseven is an EV manufacturing company, backed by Abu Dhabi-based government fund CYVN Holdings. Interestingly, CYVN Holdings has a stake in both Nio and Forseven.
More About Nio’s Agreement with Forseven
Nio’s subsidiary, Nio Technology (Anhui), signed the non-exclusive and non-transferable worldwide Technology License Agreement with Forseven. The license will allow Forseven to use Nio’s current and future technology, know-how, software, and intellectual property for research and development, manufacturing, and sales of smart EVs under the Forseven brand.
In exchange, Nio Technology will receive a non-refundable, fixed upfront license fee, and royalties derived from the future sales of licensed products by Forseven. Also, the agreement could be terminated based upon certain pre-agreed conditions, including if one or more auto manufacturing companies buys a majority stake in Forseven.
The Chinese EV makers have a dominating position in the global EV market. Some of the latest technological innovations have come from Chinese brands and investors are vying to get a piece of the market. Last year, CYVN became the largest shareholder of Nio, by investing roughly $3.3 billion in the company, representing a 20.1% stake. Earlier this month, Nio appointed two of CYVN’s appointees to its board of directors.
Are NIO Shares a Good Buy?
Recently, DBS analyst Rachel Miu reiterated a Buy rating on 9866 shares with a price target of HK$68 (48.3% upside).
On TipRanks, 9866 stock has a Moderate Buy consensus rating based on four Buys versus two Hold ratings. The Nio Inc. Class A share price forecast of HK$78.23 implies 70.6% upside potential from current levels.
