On September 23, the domestic electric bicycle brand Universe Electric Cosmosworks Co., Ltd. held a new product fair and displayed its new models. All three new cars are equipped with the company's electric drive system, and the battery system developed in cooperation with the company is expected to be further installed in the future. We believe that the rise of domestic cycling culture and vehicle brands is expected to open up the domestic electric bicycle market. In addition, the company has also refined the electric motorcycle business planning and plans to launch a number of series of electric motorcycle products to locate different travel and play scenes. We maintain the company's annual EPS forecast of 6.03x8.16x10.48in 2022-23-24; since the company went public, the average PE corresponding to Wind is 38x, taking into account the company's high overseas business exposure and the current uncertain discount, we give a certain discount at 0.8x standard deviation (10x), and maintain the "buy" rating at 28x PE in 2022, corresponding to the target price of 169yuan.

Domestic electric bikes equipped with octagonal motors are unveiled, and the domestic market is ready to start. On September 23, 2022, the domestic brand Universe Electric and the company jointly held a new product fair, showing three current products, Model R, Model An and Model V, priced at 1.68pm, 135,20000 yuan respectively. The Model R positioning all-terrain mountain bike, equipped with detachable 504Wh battery, with a range of more than 100km, weighs only 18kg Model A positioning to meet both off-road and commuting needs of the electric bike, equipped with 345Wh built-in battery, longer than 75km, the vehicle weighs only 16kg of the Model V positioning comfort electric bike, equipped with detachable 504Wh battery, endurance exceeds 100km. The three new products are equipped with octagonal intermediate motors, of which Model R is equipped with the new flagship M510 intermediate motor jointly developed by the company and Universe Electric, with rated power of 250W, peak power of 600W and maximum torque 95Nm, which can provide 2-4 times the power output of the rider, while the other two products are equipped with octagonal M200 motor, which can enlarge the driver's output by 1-3 times. We believe that in-depth cooperation with local electric bicycle brands and bicycle distribution channels is expected to accelerate the iteration of electric bicycle products and pry up the domestic market.

The market demand in Europe and the United States is strong, and the domestic market is in the ascendant. According to CONEBI et al, sales of electric bikes in Europe / the United States in 2021 were 1.14 million respectively, compared with the same period last year, + 12.3% and 40.7% respectively, and the penetration rates were 23.2% and 3.8% respectively. Overseas demand for electric bikes continues to be hot, and the industry continues to have a high demeanor. We predict that the compound growth rate in Europe is expected to reach 20% in the next 2-3 years. According to Shimano and Giant Machinery, inventory of high-end products remains low. As the basis of the company's business, demand in the European market remains stable. Due to inventory factors, the demand for hub motors in the US market is under pressure this year, but we believe that the logic of long-term product penetration improvement remains unchanged.

Although the domestic electric bicycle market is still in its infancy, considering that the foundation of the domestic manufacturing industry is mature, 70% of the electric bicycles are produced domestically, the sales volume of two-wheeled cars in China accounts for more than 1% of the world's sales in 2021, and the demand for two-wheeled cars is strong. We are optimistic about the development potential of the domestic electric bicycle market in the future. Through close cooperation with local electric bicycle brands, on the one hand, we can cultivate and promote domestic electric bicycle cycling culture, cultivate consumer awareness and pry the domestic market; on the other hand, the consumer feedback of localized products will also help the company to further improve its products, adapt to the needs of domestic consumers and accelerate product iteration.

The electric motorcycle business is becoming clear, and the second growth curve is waiting to blossom. At present, the domestic electric motorcycle market is in the early stage of development, and the major independent brands have laid out one after another, such as Chunfeng Power to set up a high-end electric motorcycle travel brand polar core, which released the baboon electric version this month; Qianjiang Motorcycle launched the electric imitation race OAO in July, with another track; Longxin GM established the electric motorcycle brand Yinwei in July and launched the electric scooter Real5T in the same period. The company also has a layout in the track for a long time, and disclosed in November last year that it plans to raise no more than RMB 1.2 billion for the manufacturing project of the electric two-wheeler drive system and the construction project of the R & D and testing center. The Suzhou factory covered by the fund-raising project has set up a new production line of traditional motors (including electric light motorcycle). After completion, the single factory will have the production capacity of 1.2 million traditional motors. In addition, the company's R & D and testing center will set up an electric motorcycle research laboratory, which will also lay a good foundation for the company's electric motorcycle business.

In this exhibition, the company said that in the future, it will launch a series of electric motorcycle products, such as wind, forest, fire, mountain, thunder and so on. We believe that the company has been in the electric motorcycle business layout for a long time, R & D end, production end, product end full capacity, is expected to open up a second growth curve, thickening revenue and performance improvement.

Risk factors: the demand uncertainty caused by the deterioration of overseas macroeconomic environment; the deterioration of overseas trade policy; the intensification of industry competition; the company's new product market development is not as expected.

Profit forecasting, valuation and rating: the company is one of the leaders of global electric bicycle drive systems and components (PAS), with a rich product range, large user scale, strong customization ability and unique brand and customer advantages. Benefiting from the high certainty of industry growth and capacity expansion, the company's performance is expected to maintain rapid growth. We maintain the company's annual EPS forecast of 6.03x8.16x10.48in 2022-23-24; since the company went public, the average PE corresponding to the consistent expectation of Wind is 38x. Considering the high overseas exposure of the company's business and the current performance uncertainty, we give a certain discount at 0.8x standard deviation (10x) and maintain the target price of RMB169and the "buy" rating at 28x PE in 2022.