Based in the People’s Republic of China, Niu Technologies (NIU) is engaged in designing, manufacturing, and selling smart electric-scooters, scooter accessories, lifestyle accessories, and performance upgrade components such as wheels and brakes. The company offers RQi and TQi series urban commuter electric motorcycles, professional mountain, and road bicycles.
The COVID-19 pandemic created a deep fear among the public of using public transportation. NIU’s electric scooters allow riders to maintain a safe social distance from others. As such, they have been witnessing a significant surge in demand both Chinese and international markets. In addition to benefiting from favorable policies supporting electric vehicles and battery technology, the company’s launch of Gova products in the Indonesia market should drive its sales growth.
NIU’s retail network expansion and its solid marketing strategy have allowed it to gain 345.9% over the past year. This impressive performance combined with several other factors has helped NIU earn a “Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates NIU:
Trade Grade: A
NIU is currently trading above its 50-day and 200-day moving averages of $30.94 and $20.46, respectively, indicating that the stock is in an uptrend. In fact, the stock has gained 28.8% over the past three months, reflecting solid short-term bullishness.
NIU’s revenue increased 36.7% year-over-year to RMB 894.5 million in the third quarter ended September 30, 2020. The company’s e-scooter sales revenues from international markets were RMB 59.6 million, representing an increase of 35.2%, and 7.4% of total e-scooter revenues globally. Its gross profit rose 28.8% from the year-ago value to RMB 145.23 million over this period.
The company recently released its e-scooter sales volume results for the fourth quarter of 2020. It sold 149,705 e-scooters, representing a 40.9% year-over-year growth. The increase in sales is mainly attributable to a demand recovery and NIU’s expanding global footprint.
In December, NIU joined hands with Aurora Mobile Limited to improve efficiency and to optimize its customers’ user experience. This collaboration will help NIU gain more insight into its users’ needs and hopefully help it maximize value creation.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, , NIU is well positioned. The stock is currently trading just 8.5% below its 52-week high of $41.51, which it hit on January 12. This bullishness can be attributed to consistent developments, a broad product portfolio, continued advancement in the international market, and the rapid expansions made by the company.
Peer Grade: B
NIU is currently ranked #25 of 52 stocks in the Technology – Hardware industry. Other popular stocks in this industry are Roku, Inc. (ROKU), Dell Technologies Inc. (DELL) and Lenovo Group Limited (LNVGY)
DELL, LNVGY, and ROKU gained 46.8%, 53.4%, and 208.2% respectively, over the past year. This compares to NIU’s 345.9% returns over this period.
Industry Rank: B
The Technology – Hardware industry is ranked #29 of 123 StockNews.com industries. The companies in this industry manufacture and sell smart e-scooters, personal computers, cameras, smart phones printers, monitors, keyboards, mice, and webcams, as well as ATMs, self-service kiosks, point-of-sale terminals, and biometric readers.
Although the pandemic initially disrupted global supply chains and production operations, the demand for products of companies in this industry increased as stay-at-home orders pushed people to adapt to living and learning virtually. Also, the demand for e-scooters rose as more people began to prefer personal vehicles over public transportation in an effort to ensure proper social distancing amid the pandemic.
Overall POWR Rating: A (Strong Buy)
NIU is rated “Buy” due to its impressive financials and short- and long-term bullishness, and underlying industry strength as determined by the four components of our overall POWR Rating.
As the shift toward green energy is gathering momentum, NIU is in a favorable position to outperform the broader market in 2021 despite gaining 345.9% over the past year. The company’s strong e-scooter sales in the fourth quarter and investors’ bullish sentiment about the EV market should drive its shares higher this year. Hence, it may be wise to bet on the stock right now.
The consensus EPS estimate of $0.06 for the quarter ending March 31, 2021 indicates a 250% improvement year-over-year. The consensus revenue estimate of $79.04 million for the next quarter represents a 137.5% increase from the same period last year.
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NIU shares were trading at $43.27 per share on Tuesday afternoon, up $5.28 (+13.90%). Year-to-date, NIU has gained 54.26%, versus a 1.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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