Niu Technologies (NASDAQ: NIU) saw an increase in its share price after delivering its e-scooter sales volume results for Q4 2020. In total, NIU exhibited more than 40% Q/Q sales growth and 42% Y/Y sales growth. That’s not all. In the China market, NIU reported 45% revenue growth Y/Y.
| Q4 2020 | Q4 2019 | Year 2020 | Year 2019 | ||||
| China Market | 137,586 | 101,918 | 572,154 | 392,459 | |||
| International Markets | 12,119 | 4,335 | 28,738 | 28,867 | |||
| Total | 149,705 | 106,253 | 600,892 | 421,326 |
According to the management, NIU obtained beneficial results in China because of new products and retail network expansion:
The growth in China market was mainly driven by retail network expansion and new products such as G0, MQi2 and MQiS, launched earlier this year. The total units of G0 sold during the fourth quarter represents approximately 21.5% of total China market volume. The total units of MQi2 and MQiS sold during the fourth quarter represents approximately 21.2% of total China market volume. Source: Press Release
NIU Is A Bit Expensive At 3x Sales
The company is currently trading with a market capitalization of $2-$2.5 billion. In 2022, analysts are expecting net sales to be equal to CNY5.3 billion, or $0.8 billion:
NIU trades at 3x 2022 sales, which I believe is not cheap. Notice that in 2022, NIU reported an operating margin of less than 7%, and net margin of 6.6%. In our view, readers will do good by looking at the company’s performance. It is a stock to follow carefully. However, I don’t believe that the share represents a clear opportunity for investors.
For more information on the company, readers should have a look at our last report “NIU: Attractive Business Model, But Share Price Is Not Attractive.” Remember to read carefully the conclusion of that report. It was explained why the share price appears a bit expensive:
With access to valuable data and a rising market opportunity, NIU will most
likely attract many growth investors. I would expect the company to deliver
a significant amount of business growth from 2020. With that, I am not a
buyer at the current share price. I will try to grab shares at 2.5x sales or
below $25. With sales growth of 36.7%, I don’t feel like paying more than
that for the shares. If you appreciate risky bets, you can buy at the current
price mark. However, remember that if NIU does not report more sales
growth in 2021 and 2022, I would not expect the share price to go up. Source: NIU: Attractive Business Model, But Share Price Is Not Attractive
Conclusion: I Would Not Buy Shares
With an innovative business model and in a growing market, NIU is a company that should be studied carefully. Consumers in China as well as the international markets like NIU’s e-scooters. The sales growth is very impressive. With that, NIU appears expensive at $29-$35. Right now, I would not buy shares of the company.
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Disclosure: We Don’t Have NIU Shares, And We Were Not Paid To Write This Article.
