Focus on golf cars/large displacement to broaden growth boundaries. Since the company was founded for the first time, it has continued to focus on the field of smart electric low-speed vehicles and special vehicles. In 2016-2021, it developed and produced its own electric scooters and expanded overseas e-commerce and supermarket channels, forming a sales model combining “independent brand+ODM sales” and omni-channel coverage. Starting in 2022, the company will develop electric golf carts, E-bikes and high-displacement all-terrain vehicles, while cooperating with developing high-end dealer channels and establishing production lines for high-displacement special vehicles and golf carts. The new categories are expected to broaden the company's growth boundaries for larger markets. We expect the company's net profit to be 391/5.21/652 million yuan in 2024-2026, corresponding EPS of 3.58/4.76/5.96 yuan, and the current stock price corresponding to PE is 20.5/15.4/12.3 times, respectively, giving a “buy” rating for the first time coverage.
Golf carts extend to low-speed vehicles (LSV) or welcome a dividend period, and the broadening of the scenario is expected to open up room for growth. Increased demand for short-distance travel in market towns represented by the United States is expected to broaden the golf cart market space. Traditional golf carts are mainly aimed at ToB scenes and dedicated sites such as scenic spots/airports. The ToC scene is mainly aimed at closed communities and has many road restrictions. Since 2021, domestic and foreign companies have launched LSV models with better performance, and the LSV has gradually become a supplementary tool for American consumers to travel short distances in urban areas with a wider driving range (can be driven on most roads in urban areas). In terms of market space, the LSV ToB scene is larger than the traditional golf cart market. The ToC market has the potential space for millions of e-bike/electric scooters (McKinsey data shows that 26% of respondents are very likely to consider using LSV as a future travel tool). In terms of industry competition, the ToB special scenario market is dominated by overseas brands. Although Chinese companies in the ToC scenario are growing rapidly, the industry is still relatively scattered. Since entering the golf cart (LSV) market in 2022, the company has launched second-generation products. Compared with domestic and foreign brands, the products have strong price competitiveness, and “ODM+ professional dealer+supermarket” is progressing steadily in terms of channels. With the improvement of the low-speed car product matrix in the future, the company is expected to quickly seize share with stronger product cost performance and faster iteration speed, and benefit from the dividend period of the scooter to the LSV sector.
New categories of E-Bike/high-displacement all-terrain vehicles are incremental, scooters/balance scooters or stable all-terrain vehicles: the scale of the industry is stable. The company moved from small displacement to large displacement, and the 2023H1 500ATV and UTV entered small-batch trial production one after another. In addition, the company simultaneously developed high-end professional dealer channels. Large-displacement all-terrain vehicles target mainstream markets and have higher customer unit prices. As channels expand, the company's all-terrain vehicles still have room for growth.
E-bike: The North American market has a low penetration rate, and the future is a major growth area. The company's existing products have covered various scenarios such as urban commuting, cruising, snow/mountains, etc. Based on the previous good accumulation in the North American market, the company's E-Bike dealer channel is rapidly expanding, and the E-bike business is expected to grow steadily under the North American market growth+channel expansion.
Risk warning: New category market expansion falls short of expectations: overseas demand falls rapidly; industry competition intensifies, etc.