Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Niu Technologies (NIU, Financial) reported a 21% year-over-year increase in total sales volume for Q2 2024, reaching 256,000 units.
- The China market saw a 16% year-over-year increase in sales volume, while the overseas market experienced a significant 45% year-over-year growth.
- Total revenue for Q2 2024 reached RMB940.5 million, marking a 13.5% year-on-year increase.
- The company successfully launched several new products targeting different consumer segments, including Gen Z and female users, which were well-received.
- Niu Technologies (NIU) expanded its sales network by opening over 400 new stores in the first half of 2024, primarily in Tier 3 and Tier 4 cities.
Negative Points
- Gross margin for Q2 2024 was 17%, a decline of 6.1 percentage points year-over-year and 1.9 percentage points quarter-over-quarter.
- The company reported a net loss of RMB25 million for Q2 2024, compared to a net loss of RMB2 million in the same period last year.
- The electric 2-wheeler segment saw a 69% year-over-year decrease in business for the first half of 2024, driven by both external and internal factors.
- The ASP (Average Selling Price) for China scooters decreased by 2% year-over-year and quarter-over-quarter, impacting revenue.
- The increased proportion of lower-margin overseas kick scooters contributed to the overall decline in gross margin.
Q & A Highlights
Q: What is the expected gross profit margin (GPM) for the third quarter and the trend for the next few quarters?
A: The gross margin dropped mainly due to the introduction of high-end lead acid motorcycles in the premium series, which have a lower margin compared to lithium-ion models. Additionally, increased channel profits to distributors and a higher proportion of overseas kick scooter sales also impacted the margin. While the gross margin is expected to be lower than previous years, it will remain higher compared to competitors in the China scooter market. (Zhou Wenjuan, CFO)
Q: Do you have a higher target for the dealer network volume or shop volume in China by the end of this year?
A: The goal is to add roughly another 1,000 stores this year. In the first half, we opened over 400 stores but also closed about 100, resulting in a net addition of close to 300 stores. We aim to continue this expansion in Q3 and Q4. (Yan Li, CEO)
Q: What is the potential impact of the new national standard on the high-end market?
A: The new national standard focuses on better safety and design form factors, which could be positive for us. Our design team is developing products to meet these new standards, and we are closely monitoring the situation to understand its full impact. (Yan Li, CEO)
Q: What is your expected gross margin for kick scooters in the mid-to-long term, and how can it be improved?
A: The gross margin for kick scooters has remained stable for the past three quarters. We expect to see economies of scale benefits when sales volume reaches around 0.5 million units. Currently, we view kick scooters as a strategic product to reinforce our brand in developed countries rather than a major profit stream. (Zhou Wenjuan, CFO)
Q: Will the operating expense ratio continue to decline in the second half of the year?
A: Yes, as revenue increases, the operating expense ratio will drop. We have already improved operating efficiency, and we expect the annual OpEx as a percentage of revenue to return to the normal level of around 16% to 20%. (Zhou Wenjuan, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
