Daily Brief Equity Bottom-Up: 2025 High Conviction: Short NIO (NIO US/9866 HK) and more

• NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed across three exchanges. 
• NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in 2026 is likely to be broken.  
• NIO’s valuation is stretched as it trades at a material premium to median Chinese EV peers’ EV/Sales and growth-adjusted EV/Sales multiples. 

• Shiseido’s stock price has dropped 70% from its post-pandemic peak, presenting a buying opportunity amid ongoing industry challenges.
• The company’s two-year action plan aims to restore profitability through aggressive cost-cutting and restructuring measures.
• Successful execution could drive significant upside, while failure may attract acquisition interest due to Shiseido’s strong Asia-Pacific brand presence.

• Northvolt was once seen as Europe’s battery champion but faced challenges with management, safety standards, reliance on foreign machinery, and misuse of capital
• Northvolt filed for bankruptcy after facing issues with production output, leading to job cuts and a strategic review to restructure the company. Investors like Goldman Sachs wrote down their investments in Northvolt to zero, raising questions about the future of battery making in Europe.
• Investors like Goldman Sachs wrote down the value of their Northvolt investments to zero.

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• Implementation of SEBI’s new F&O circular to remove weekly option contracts, is expected to significantly impact BSE’s market share in derivatives. 
• The new F&O circular is anticipated to considerably affect BSE’s topline and bottom line. Management believes the initiatives will ultimately enhance market efficiency and benefit investors. 
• With removal of weekly contracts, it is expected that volumes will increase in existing contracts, which will benefit more to BSE vs NSE. 

• Janux Therapeutics has taken the biopharmaceutical industry by storm with its recent announcement of groundbreaking results from its Phase 1 clinical trial of JANX007, a tumor-activated T-cell engager targeting advanced prostate cancer.
• The data reveals a stunning 100% PSA50 response rate among heavily pretreated patients, with 63% achieving PSA90 and 31% achieving PSA99—a significant milestone in prostate cancer treatment.
• The company has prioritized the development of second- and third-line therapies for metastatic castration-resistant prostate cancer (mCRPC), aiming to address a substantial unmet need in oncology.

• The core business continues to perform well  with a growing  order backlog
• Due to the company’s historical issues it has hugely underperformed its smaller peers
• The disconnect from the oil price provides  asymmetric upside once the overhang clears

• Business Breakdowns series delves into SpaceX with investor Luke Ward from Bailey Gifford
• Focus on SpaceX’s business model, cost curve of launches, and potential future of the space economy
• SpaceX is a business and technology innovator, with a focus on economic sustainability and funding additional technology innovation to expand market capabilities, such as with Starlink.

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• Sales increased 3.6% YoY to JPY26.1bn, while operating profit decreased 25.3% YoY to JPY1.2bn.
• Japan segment sales rose 4.2% YoY to JPY23.2bn, driven by inbound demand and higher unit prices.
• SG&A expenses grew 4.1% YoY to JPY16.5bn, with a 0.4pp increase in the SG&A ratio to 63.3%.

• Workman was a purveyor of durable gear for workers in jobs like construction but then had the brilliant idea to transpose that expertise to create activewear like Decathlon.
• This was working well but then it decided to take on the likes of Fast Retailing and Shimamura by moving into casual clothing.
• Since then, same-store sales growth has been negative in many months and profits have fallen. The outlook is increasingly poor.

• General Motors (GM) is navigating turbulent waters as it steers towards an electric vehicle (EV)-focused future.
• Recent developments, such as the sale of its stake in a Michigan battery cell plant for $1 billion to LG Energy Solution, underline GM’s efforts to streamline its operations and adapt to evolving market conditions.
• Meanwhile, the company announced a significant write-off of $2.8 billion for its Chinese joint venture with SAIC Motor and an additional $2.7 billion restructuring charge to address declining profitability in one of its largest markets.