Electric Scooter Company NIU Technologies not Pumping the Brakes on Growth

Key Takeaways

NIU Technologies is a leader in the premium e-scooter market, particularly in their home country of China. Despite recent setbacks due to COVID, NIU appears to have weathered the lockdown in China relatively well, and is set to capitalize on ongoing trends that are expected to drive substantial growth in the e-scooter market. However, 2Q20 earnings statement will reveal whether NIU had the same resilience in the European market. Additionally, NIU's full expansion to the U.S. may be hampered by what appears to be a long-term battle with COVID, as well as trade-war barriers and increasing concerns over Chinese companies' access to American data. Regardless, NIU looks poised to continue its positive growth and popularity across major markets. Analyst target price has been variable, typically ranging from $16 - 24 (with a late-June projection by Piper Sandler analyst Alex Potter pegging a target of $24), and given the potential of NIU to keep growing, the higher range feels appropriate.


NIU Technologies is an electric scooter company based in China. NIU saw significant growth in sales in 2019, capitalizing on the growing interest in electric vehicles in both China and in Europe. Now, NIU is set to launch in the U.S., targeting urban areas and college towns (e.g., Chicago, Boston, New York). NIU has positioned its product as a premium offering with various digital capabilities such as location, vehicle status, ride history, and power statistics that are available through a paired app. The scooters also come with features such as anti-theft alerts and extensive after-sales services, all aimed at making this a fun, easy, and engaging ride. However, NIU faces stiff competition from fellow China-based company Yadea, which also offers its own “smart” e-scooter, and holds the highest market share in China. Additionally, companies such as Taiwan-based Gogoro initially offered lower-priced, more versatile scooters, but have recently released a “smart scooter” that aims to cut into the premium market.

Electric Scooter Market

Analysts are projecting substantial growth (i.e., CAGR of 6 - 8%) in the e-scooter market across key major geographies including the U.S., Europe, and even in China, which currently makes up the largest e-scooter market in the world. Additionally, India is set to become a lucrative market in this space, and the ability for companies to carve out a share of this market could substantially increase company value. While COVID has temporarily dampened sales, the trends following the wake of the pandemic may actually favor greater use of e-scooters, as commuters look for alternatives to ride-sharing apps and crowded public transportation. This sets NIU up well in the future, particularly if it can successfully expand to new markets.

Stock History

$NIU hovered around the $8 - 10 range for nearly a year leading up to the pandemic, before dropping to a low of $6 in late March as the impact of COVID was felt across the economy. However, since mid April, $NIU has exploded in value, closing at $18 before the 4th of July weekend, with a notable growth spurt in mid June after positive ratings from financial analysts. Considering this 200% increase in the space of three months, the question remains: how high can $NIU go? With a current market cap of ~$1 B, and e-scooter demand set to expand however, $NIUwill have room to expand, even despite the recent run-up. We expect the 2Q20 earnings statement to have a significant impact on stock price, as it will indicate how robustly China has rebounded from lockdown as well as how hard of a hit was taken in Europe.

Company Fundamentals

$NIU's most recent earnings report for 1Q20 must be viewed through the lens of COVID impact, While YoY sales fell 39% in 1Q20, this is mainly attributed to the shutdown of the Chinese economy, as exports to Europe actually increased by ~5% during this time. Furthermore, $NIU’s China sales experienced a smaller drop than the overall Chinese motorcycle market, which fell 58%. We will likely see lower sales in Europe (currently composing ~30% of sales) for 2Q20, but the company is projecting a YoY revenue increase of 10 - 23% for this quarter, demonstrating management’s confidence in $NIU’s post-COVID recovery

Revenues in 2019 grew 38.1% YoY, topping initial guidance, and total sales volume increased by 13.8% over 2018. NIU has seen gross margins increase from 13.4% in 2018 to 23.4% in 2019, and despite selling more scooters, operating expenses declined 35.9% during the same time period. This resulted in the operating margin climbing from ~-3.5% in 2018 to ~8.5% by 2019. Finally, net income in 4Q19 hit $8.5 M, and NIU has ~$100 M in cash on hand, meaning they are unlikely to encounter any cash burn situations that seriously jeopardize the company. We expect these 2019 numbers to be more reflective of the overall strength of NIU's financials versus the 1Q20 numbers, but we will be keeping a close eye on 2Q20 earnings.

One additional factor to note from NIU is whether their manufacturing can keep up with their ambitious expansion plans. The recent addition of a manufacturing plant with the capacity to produce 700 K scooters/year should be sufficient to support $NIU’s near-term growth goals. For context, NIU sold approximately 400 K scooters in 2019.


There will be two key pieces of data to look at when NIU releases their 2Q20 earnings report. The first is to what extent sales have picked back up in China now that lockdowns have been largely lifted. As this China composes ~70% of sales, a quick recovery will help buffer NIU from downturns in other markets. The second is how hard European sales have been impacted;while the bulk of sales still come from China, Europe still accounts for ~30% of revenues, so a steep drop would meaningfully impact overall sales numbers. Considering NIU has projected a YoY revenue increase of 10 - 23%, the combined sales numbers across Europe and China may need to exceed this estimate to push the stock higher.

On the other hand, the full U.S. launch later this year may be stymied by various factors. One trend to keep an eye on is the trade war between China and the U.S. If Biden gets elected, or if Trump backs off his harsh position toward China, we would expect opportunity in the U.S. to be meaningfully increased. We also note that, as $NIU makes "internet-connected" vehicles, there may be resistance to adoption in the U.S. over data collection concerns. And of course, considering the recent explosion of COVID cases in the U.S., the economy could remain in a depressed state for the foreseeable future, limiting overall opportunity at least until the U.S. can get the virus under control.

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