Key Takeaways:

• Niu Technologies said its unit sales at home and abroad rose more than 30% in the first quarter, following a tough 2023 when its revenue fell 16%
• The electric scooter maker’s shares jumped 34% from an all-time low in the week following the announcement

By Edith Terry

Niu said that its premium NXT e-bike, released in February, was responsible for 26% of its domestic sales during the quarter. Within two weeks of the release, the model had 10,000 pre-sale orders, according to the company. The company credited its strong international gains to “our comprehensive product line-up” and progress in its retail channel expansion.

“We expect to regain growth momentum in 2024, propelled by new models and expanding sales channels,” the company said. “Our unwavering confidence in reclaiming growth underscores our commitment to industry leadership.” For the year, Niu anticipates sales of 1 million to 1.2 million units, CEO Li Yan said on the company’s earnings call in March after the release of its fourth quarter and full-year 2023 results.

On the same call, CFO Fion Zhou said the company expects to report revenue growth of about 10% in the first quarter, far less than the unit sales growth announced last week. That implies its average selling prices were down year-on-year amid stiff competition both in China and abroad, continuing a trend from last year.

Big addressable market

Li said on the fourth-quarter earnings call that China’s addressable market for more upscale scooters priced above 3,500 yuan ($484) was 14 million to 16 million units last year, even though Niu only sold about 600,000 units in that category.

In addition to going upscale, Niu is planning to return to expansion mode with plans to open 1,000 to 2,000 stores domestically this year and experiment with direct distribution to retailers overseas, which it believes will help build brand loyalty. It is also working on branding and marketing programs, from livestreaming to a joint effort with JD Gaming, a leading e-sports team in China and a finalist in the League of Legends World 2023.

The return to growth looks good, but can Niu sustain a broader turnaround this year? Its last earnings report for last year’s fourth quarter and all 2023 has plenty of room for improvement. The company’s fourth-quarter revenue fell 21.8% year-on-year to 478.7 million yuan, while its gross margin fell from 22.5% to 19% over that period. Niu reported a net loss for the quarter of 130.2 million yuan in 2023, widening from a 37.1 million yuan loss in 2022.

Its full-year revenue of 2.6 billion yuan was down 16.3% from 2022, and its gross margin of 21.5% last year rose slightly from the 21.1% for 2022, with the small increase due to the launch of new premium products in China. Its annual net loss widened from 49.5 million yuan in 2022 to 271.8 million yuan in 2023.

While the latest data shows Niu’s revenue per scooter continued to fall in the first quarter, one promising sign is that the rate of the declines seems to be levelling off from even sharper declines in 2023. In last year’s fourth quarter, its average revenue of 3,482 per scooter was down 21% from a year earlier.

Four analysts surveyed by Yahoo Finance were split between “buy” and “hold” recommendations for Niu in recent months. But in a positive sign, they shifted to “buy” and “strong buy” this month as the company returns to growth. Two analysts who submitted financial forecasts also expect the company to return to a profit this year.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.