On the scale side, according to the Luyuan prospectus quoting Frost & Sullivan, the global sales volume of electric two-wheelers in 2022 was 81.8 million, of which 60.7 million units were sold in China, accounting for 71%. Sales of electric two-wheelers in China are expected to reach 77.2 million units in 2027, with a CAGR of 4.6% in 23-27. By model, the sales volume of electric cars, electric light motorcycles, and electric motorcycles in 2022 was 4910, 450, and 7.1 million units, respectively. Looking at prices, retail sales of less than 1,500 yuan, 1500-3,500 yuan, and 3,500 yuan and above accounted for 23%, 75%, and 2% of sales in 2022, respectively. Among them, the portion of 3,500 yuan and above grew the fastest. It is estimated that the CAGR for 23-27 will be 4.4%.
On the competitive landscape, the electric two-wheeler market in mainland China is highly concentrated. By the end of '22, nine major manufacturers had a market share of about 80.8%. In terms of revenue, Yadi ranked first, with a market share of 26.9%; Emma ranked second, with a market share of 18.0%; Xinri and Luyuan ranked fourth and fifth, with a market share of 4.2%; and Mavericks ranked ninth, with a market share of 2.7%.
On the channel side, as of April '23, Luyuan had more than 1,300 dealers and more than 11,400 sales points in mainland China. In '22, Luyuan's offline, online, 2B, and overseas sales revenue accounted for 90%, 6%, 2%, and 2%, respectively. On the product side, Luyuan focuses on liquid-cooled electric motor vehicles (10-year shelf life), ceramic braking systems, and graphene extended-range steel wire tires to increase safety and reliability. As of April '23, the company had 16 models in production and 10 models under development with relevant smart features.
On the financial side, in 20-22 and January-April '23, Luyuan's revenue was 24.34/48/1.7 billion yuan, respectively, with year-on-year changes of -5%/+44%/+40% in 20-22; sales volume was 147/195/2.42 million vehicles, respectively, with a year-on-year change of +5%/+32%/+24% year-on-year. By product, 22H2 accounts for 50%/4%/18%/23%/4%/0.1%/1% of revenue from services such as electric motorcycles/electric motorcycles/batteries/components/ other vehicles/ training, etc. Gross margin declined from 13.7% in '19 to 11.7% in '22. The cost ratio has been declining steadily, and the 22-year sales/management/ R&D/finance rates were 5.4%/1.9%/3.1%/-0.1%, respectively. The net interest rate remained between 1.5%-3%, or 2.5% for 22 years.
In terms of volume, Luyuan Electric sold 1.755 million units (yoy +57%), 547,000 electric motorcycles (yoy +37%), and 172,000 electric light motorcycles (YOY -48%) in '22, mainly influenced by the new national standard policy preferences. In terms of price, the price of 22H2 has increased to a certain extent. The electric ASP is 1,321 yuan (yoy +8.3%), the electric motorcycle ASP is 1,700 yuan (yoy -4%), and the electric light motorcycle ASP is 1453 yuan (yoy -6%). The trend of product optimization and upgrading is obvious. In terms of profit, Luyuan Bike's net profit from 20 to 22 was 27/30/49 yuan, respectively, and the year-on-year change from 21 to 22 was +11%/+60%, respectively.
Profit forecast and rating: We expect the company's revenue for 23-25 to be $57.4/66.0/7.59 billion yuan, respectively, with a year-on-year growth rate of +20%/+15%/+15%; net profit to mother will be 1.5/1.7/190 million yuan, respectively, with a year-on-year growth rate of +29%/+12%/+10%. As a leading electric two-wheeler company, the company gave a PE valuation of 17 to 19 times in 24, corresponding to a reasonable value range of 7.37 to 8.24 HKD (exchange rate: 1 RMB = HK$1.0866), giving it a “superior to the market” rating.
Risk warning: Competition in the electric two-wheeler industry is intensifying, demand side falls short of expectations, raw material prices fluctuate, and cross-market valuation risks.