Niu Technologies: A High-Growth EV Play

Investment Thesis - Niu Technologies is currently undervalued despite having multiple growth drivers that are expected to enhance revenues in the future [2] - The company focuses on electric scooters, a niche market with significant growth potential, especially as the global trend shifts towards electric vehicles [2] - Niu Technologies is anticipated to achieve profitability within the next 2-3 years as it expands internationally and resolves operational challenges [2] Company Overview - Niu Technologies is a Chinese manufacturer specializing in electric scooters and motorcycles, with a diverse product portfolio that includes six electric scooter series, one kick-scooter series, and one e-bike series [3] - The company emphasizes user-friendly designs and integrates its products with an app for enhanced functionality [3] Sales Performance - In 2022, the Gova and UQi series accounted for approximately 75% of total unit sales, with Gova targeting the mid-level e-scooter market and UQi designed to be ultra-light and compact [4] - Total unit sales for 2022 reached approximately 831,593 units, with a significant decline in 2023 attributed to operational disruptions and the impact of lithium battery price hikes [5][6] Revenue Breakdown - In 2023, Niu Technologies generated total revenues of around $370 million, with 76% coming from electric vehicle sales in China, 13% from international sales, and 11% from accessories and services [5] - The company expects to see a rebound in sales volume, projecting 1 to 1.2 million units in 2024, representing a 50% increase from 2023 [8] Market Potential - The global electric scooter market is projected to grow from $15.22 billion in 2021 to $31.04 billion by 2028, with a CAGR of 10.7% [8] - Urbanization and the need for affordable commuting options are expected to drive demand for electric scooters, positioning Niu Technologies favorably in the market [8] Profitability Outlook - Analysts predict earnings of 20 cents in 2024 and 30 cents in 2025, with expectations that the company will return to profitability as operational issues are resolved and sales increase [9] - The decline in lithium battery prices is expected to contribute positively to profit margins, alongside a focus on premium products with better margins [10] Valuation - Based on projected revenues and conservative growth estimates, the fair value of Niu Technologies is estimated at $3 per share, indicating that the stock is trading close to net cash and represents a bargain opportunity [11]