Company Name: NIU Technologies
Entry Price: $28.50
Target Price: $37.00
Projected Yield: 29.8%
Time Line: 3 to 6 months
About NIU Technologies
The company was founded in 2014, and today is one of the largest Chinese electric scooter manufacturers providing a line of scooters with various features. Additionally, NIU enables smart syncing e-scooters with the proprietary cloud system via an app, which allows one to get information in real time.
What's the Idea?
Capitalize on a stock that may rise with the company's competitive advantages and the growing popularity of electric vehicles around the world.
Buy NIU Technologies Shares >>
Why Trade NIU Technologies?
Reason 1: The Increasing Popularity of Electric Vehicles
Electric vehicles are becoming more popular throughout the world, which is confirmed with the electric cars and scooters sales in recent years. One of the key reasons here is that many countries are taking measures to reduce carbon dioxide emissions by supporting the use of electric vehicles. For instance, many EU countries provide various benefits to the e-vehicles owners. Recently, China has also been making a great contribution to the development of this industry, supporting not only consumers but also manufacturers.
The popularity of electric scooters has thus grown exponentially over the last few years, which can also be seen with NIU's sales. In the first six months of 2020, the company sold 200,000 scooters, showing an increase of 21% compared to 2019 and 60% compared to 2018. The key target market is the domestic one, China, while in overseas markets, NIU mostly focuses on the EU. This strategy is quite reasonable considering the electric transport lobby in that region.
The popularity of electric scooters will continue rising moving forward, which will help NIU maintain good sales numbers growth in the coming years. The continued popularity of food and light goods delivery during the pandemic, where electric scooters are often used, may also boost this trend.
Reason 2: A Well Established Major Company
Over the six years of its existence, NIU was able to become a major market player, as it has not only significant production facilities, but also an extensive distribution network. NIU owns a factory in Changzhou with a production capacity of 1.08M scooters per year, and a wide distribution network of 1,084 stores in China. Besides, it distributes its products in 45 other countries. Apart from offline sales, NIU is actively developing its online distribution channels through its own application and affiliate platforms.
A wide range of models with various modifications is an additional advantage, while it is also planned to launch three more new products in the near future. NIU was able to sell 1.20M scooters to date, thus managing to gain a large target audience. With all those factors put together, the company has significant competitive advantages that may facilitate its further expansion in the electric scooter market.
Reason 3: Stable Financial Conditions
NIU increased its scooter sales by 21% in the first six months of 2020, despite the volatility caused by COVID-19. The company's earnings, however, fell by 1% due to the price dumping policy. NIU's earnings are still poorly diversified, geographically. Since early this year, the share of the company's earnings from the domestic market has increased to 85.50%, which is mainly due to the border lockdown and the disruption of supply chains. As the situation around the globe gets stabilizes, this is likely to improve.
One of the NIU's important achievements is reaching positive profit numbers in a relatively short time: since early this year, the operating and net profit margin amounted to 2.20% and 3.50%, respectively. The company also has a good balance sheet, with CNY 1.02B of cash on its account, while the loan amounts to CNY 180M. Thus, the NIU has no liquidity problems. At the moment, the company's stock is trading at acceptable ratios, the value-to-sales ratio being 1.63x, and the value-to-EBITDA ratio being at 17.54x. Meanwhile, the share price to future earnings per share ratio is 43x.
A stable financial condition, significant production capacity, and the availability of funds provides NIU with an opportunity to continue its expansion both in the domestic and overseas markets.
How to Use the Idea
- Buy NIU Technologies shares at $28.50.
- Allocate no more than 2% of your portfolio amount. To build a balanced portfolio, you can use our analysts' recommendations for an USD or a EUR portfolio.
- Sell the stock when the price is at $37.00 per share.
How to Buy NIU Technologies Shares?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in either of the following ways:
Freedom24 Web Platform: In the Web Terminal section, type NIU.US (NIU Technologies ticker in the NASDAQ) in the search box, and select NIU Technologies in the results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search box that will show up, type NIU.US (NIU Technologies ticker in the NASDAQ) and select NIU Technologies in the results. You will then see NIU Technologies stock in the market watch; tap it and go to the Order tab in the dialog that will show up. Specify the number of shares you want to buy and click Buy.
Buy NIU Stock: Capitalize on the Growth of Consumer Interest in Electric Vehicles!
Buy NIU Technologies Shares >>
*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.