八方股份20250328

Summary of Baifang Co., Ltd. Conference Call Company Overview - Baifang Co., Ltd. specializes in the electric bicycle industry, primarily selling battery, motor, and electronic control systems. The company generates approximately 70% to 80% of its revenue from the European market, with the remainder from domestic and U.S. markets [3][4]. Core Insights and Arguments - Market Volatility and Performance: Since its IPO in 2019, Baifang has experienced significant volatility, particularly during the COVID-19 pandemic when demand for short-distance travel surged in Europe, leading to substantial growth in performance [4]. - Inventory Challenges: The company faced inventory accumulation in 2021-2022, which has depleted future demand, resulting in a projected annual sales volume of around 1 million units for 2023-2024 [4][5]. - Response to Order Reductions: To counteract reduced orders from existing customers, Baifang developed integrated wheel motor business to maintain employment and supported 2,000 dealers in Europe to enhance after-sales service, thereby attracting new customers [4][6]. - Quality Improvement Initiatives: Baifang established a research and development center in Suzhou and acquired testing equipment to improve product quality and reliability, which helped regain some old customers and attract new ones [4][7]. - Future Demand Recovery: The electric bicycle industry is expected to undergo a replenishment cycle, with inventory levels of old customers dropping to low points, suggesting a potential increase in demand starting in the second half of 2025 [4][9]. - Revenue and Profit Outlook: Baifang's revenue and profit previously reached approximately 3 billion and 600 million RMB, respectively. However, due to fixed asset depreciation and losses from integrated wheel motors, profits are expected to stabilize at around 400 to 500 million RMB [4][13]. - Current Order Visibility: The company currently has low order visibility, with a weak recovery state. It is anticipated that by mid-2025, old customer inventory will be fully digested, leading to a clearer recovery trend in the second half of the year [4][14]. Additional Important Insights - Sales Performance in 2021-2022: Sales volume increased significantly during these years, with motor sales rising from approximately 1 million units pre-pandemic to 2.12 million in 2021 and 1.64 million in 2022, leading to a total inventory depletion of about 1.7 to 1.8 million units [5]. - Industry Inventory Dynamics: The electric bicycle industry has experienced cycles of inventory accumulation and depletion, with major Taiwanese brands expected to complete inventory clearance by mid-2025 [9]. - Growth Potential in Europe: The electric bicycle market in Europe is characterized by growth potential, with a current penetration rate of about 29%. The market is expected to benefit from economic recovery and infrastructure plans, potentially increasing penetration to 70%-80% in the coming years [11][12]. - Impact of Economic Recovery: The recovery of the European economy is expected to positively influence the electric bicycle industry, with a potential return to 2 million units in sales volume if old customer orders return alongside new customer acquisitions [12][13]. - Future Revenue and Profit Expectations: Baifang is projected to experience a recovery in the coming years, driven by the return of old customers and the acquisition of new ones, which could enhance market share [18].