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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company demonstrated strong financial performance with a 34% revenue growth and a return to profitability. Despite challenges in overseas markets, domestic growth and improved gross margins were significant positives. The Q&A highlighted optimism in market recovery and expansion plans. However, increased operating expenses and lack of clear guidance for Q3 and next year's sales volume were concerns. Overall, the positive aspects, such as strong domestic performance and strategic expansion, outweigh the negatives, suggesting a likely positive stock price movement in the short term.
Total Sales Volume 350,000 units, representing a 37% year-over-year increase. China market sales surged by 54% to 318,000 units, while overseas market sales declined by 35% to 31,000 units due to U.S. tariffs and competition in Europe.
Revenue RMB 1.26 billion, a year-over-year growth of 34%. This growth was driven by product portfolio optimization and cost reduction.
Gross Margin 20.1%, up 3.1 percentage points year-over-year and 2.8 percentage points quarter-over-quarter. Improvement attributed to product platformization and cost reduction.
Net Profit RMB 5.9 million, compared to a net loss of RMB 25 million in the same period last year. Improvement due to disciplined execution and focused strategy.
China Scooter Revenue RMB 1.15 billion, a 45% year-over-year increase, driven by increased sales volume. However, ASP declined by 5% year-over-year due to a shift in product mix.
Overseas Revenue RMB 110 million, representing 9% of total revenue. Scooter revenue declined from RMB 130 million to RMB 103 million year-over-year, but ASP increased by 23% due to a higher proportion of electric motorcycles in sales.
Operating Expenses RMB 265 million, a 38% year-over-year increase. Selling and marketing expenses rose due to higher spending on online shopping festivals and marketing events.
R&D Expenses RMB 44 million, a year-over-year increase due to higher staff costs, share-based compensation, and design/testing expenses.
G&A Expenses RMB 19 million, a year-over-year decrease attributed to foreign currency exchange gains.
Operating Cash Inflow RMB 519 million, reflecting strong cash flow performance.
New Product Launches: Introduced NX Pro Electric Motorcycle priced at RMB 9,999, positioned as a speed champion among sub RMB 10,000 electric motorcycles. Expanded high-end electric motorcycle lineup with NXL, NL, and FX Pro models, priced between RMB 4,000 to over RMB 10,000. Launched NX, an entry-level smart e-motorcycle priced between RMB 3,599 to RMB 4,499, targeting young urban riders.
Product Innovation: Developed advanced intelligent features such as full-color TFT display, OkGo technology, dual-way throttle, and downhill assist. Enhanced safety with features like dual-channel ABS and driver dynamic safety warning system.
Regulatory Compliance: Developing new product lines to comply with new national standards for electric bicycles effective September 1, 2025.
China Market Expansion: Achieved 54% year-over-year growth in sales volume in China, reaching 318,000 units. Expanded retail footprint with 185 new stores in Q2, focusing on Tier 3 and Tier 4 cities. Online sales contributed 77% of total sales volume.
Overseas Market Challenges and Growth: Overseas sales volume declined by 35% year-over-year to 31,000 units due to U.S. tariffs and European competition. However, electric 2-wheeler sales grew 4x year-over-year. Expanded direct distribution model in key markets like Germany and Italy, increasing direct-distributed stores from 181 to 244.
Revenue and Profitability: Revenue grew 34% year-over-year to RMB 1.26 billion. Gross margin improved to 20.1%, up 3.1 percentage points year-over-year. Achieved net profit of RMB 5.9 million, reversing a net loss from the previous year.
Cost Optimization: Improved gross margin through product portfolio optimization and cost reduction initiatives.
Brand Strategy: Aligned product launches with high-impact marketing events, achieving significant online and offline engagement. Surpassed RMB 1.06 billion in GMV during the 618 shopping campaign, a 128% year-over-year increase.
Channel Expansion: Focused on penetrating underrepresented markets in China and expanding direct distribution in overseas markets.
Overseas Market Sales Decline: The overseas market recorded a 35% year-over-year decline in sales volume, primarily due to the impact of U.S. tariffs and intensifying competition in the European market for micromobility segments.
New National Standards for Electric Bicycles: The new regulation for electric bicycles in China, effective September 1, requires manufacturers to stop shipping old standard products by August 31. This could disrupt production and sales if the transition to new standards is not smooth.
U.S. Market Tariff Impact: The U.S. market faced challenges due to tariff-driven adjustments, leading to reduced selling volumes and a shift in customer preference towards low to mid-pricing scooters.
European Market Price Competition: Intensified price competition in key European markets, including Germany, France, Italy, and Spain, has pressured sales performance and contributed to a substantial decline in the micromobility segment.
Profitability Challenges in Overseas Markets: The overseas gross margin was negatively impacted by changes in product mix, U.S. tariffs, and aged inventory write-downs, reducing the overall gross margin by 2 percentage points.
Increased Operating Expenses: Operating expenses increased by 38% year-over-year, driven by higher spending on online shopping festivals, marketing events, and R&D expenses, which could strain profitability.
Revenue Projections: The company expects third-quarter revenue to be in the range of RMB 1.4 billion to RMB 1.6 billion, representing a 40% to 60% year-over-year increase.
China Market Outlook: The company anticipates benefiting from seasonal trends, strong product momentum, and a potential temporary demand surge due to new regulations. The launch of competitive NX electric motorcycles and upgraded smart electric bicycles positions the company effectively to meet evolving consumer preferences. Channel expansion efforts are expected to add over 1,000 stores in 2025, with 589 stores already added in the first half.
Overseas Market Outlook: The company is optimistic about recovery and profitability in overseas markets. Growth in electric two-wheeler sales and strong performance in direct distributor regions validate the market competitiveness of products and retail channels. The company plans to expand its direct distribution network and expects continued growth in electric moped sales. In the U.S., the company is addressing tariff impacts and shifting consumer preferences by launching a low-cost K90 model in Q4. In Europe, the focus will be on profitability in selected markets. The Asian market is expected to continue its healthy growth trajectory.
Gross Margin and ASP: The company is confident in maintaining a healthy gross margin and stable average selling price (ASP) throughout the second half of the year, supported by product portfolio optimization and platformization efforts.
Regulatory Impact: The new national regulation for electric bicycles, effective September 1, 2025, is expected to drive a temporary demand surge in Q3 and Q4 as distributors build up inventories and consumers purchase old-standard products before the November 30 deadline.
The selected topic was not discussed during the call.
The earnings call reveals strong financial performance, with a 65% YoY revenue increase and improved gross margins. Despite overseas market challenges, the domestic market shows robust growth, and the company anticipates a temporary demand surge due to regulatory changes. However, the guidance for Q4 is mixed, with possible revenue decline. The lack of Q&A suggests no major concerns from analysts. Overall, the positive financial results and strategic positioning in China outweigh the overseas risks, leading to a positive sentiment.
The company demonstrated strong financial performance with a 34% revenue growth and a return to profitability. Despite challenges in overseas markets, domestic growth and improved gross margins were significant positives. The Q&A highlighted optimism in market recovery and expansion plans. However, increased operating expenses and lack of clear guidance for Q3 and next year's sales volume were concerns. Overall, the positive aspects, such as strong domestic performance and strategic expansion, outweigh the negatives, suggesting a likely positive stock price movement in the short term.
The company shows strong financial performance with a 35% revenue increase and gross margin improvement. Despite competitive and regulatory challenges, the positive guidance for sales volume and revenue, along with plans for expansion, suggest optimism. Analysts' sentiment appears cautiously optimistic, particularly regarding sales and margin recovery. The absence of a share buyback program is a minor negative. Overall, the company's strategic plans and improved financial metrics indicate a positive outlook, likely leading to a stock price increase of 2% to 8% over the next two weeks.
The earnings call presents a mixed picture. Positive aspects include strong sales volume growth, improved gross margins, and optimistic guidance for revenue and profitability. However, risks such as competitive pressures, regulatory issues, and supply chain challenges temper this optimism. The Q&A reveals some uncertainty regarding overseas growth amid tariffs. The lack of a share buyback program and the ongoing net loss further balance the positives. Given the mixed sentiment and absence of a strong catalyst, the stock price is likely to remain stable, resulting in a neutral prediction.
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