In the China concept stock market from the end of September to the beginning of October this year, niu technologies (NIU.US) started its price rally from September 16, with the price climbing to a high of $3.5 on October 7, a maximum increase of 94.44% in the range. However, after this round of speculation, niu technologies' stock price quickly retreated, falling to a low of HKD 1.73 during intraday trading on November 22, giving back all gains from the previous round. Although the company's stock price rose 2.78% at the close on the 22nd, there remains a possibility of approaching the previous low point of $1.56.

It is worth mentioning that on November 18, during pre-market trading in the usa, niu technologies disclosed its 2024 Q3 financial report, which showed a revenue increase of 10.5% year-on-year, with electric scooter sales in overseas markets rising 50.3% year-on-year. However, this financial report seemed not to receive a bullish response from the market, as the company's stock price fell sharply by 7.58% the next day, which is one of the main reasons for the rapid approach of niu technologies' stock price to historical lows.

The stock price continues to decline, but the "washing" may not be finished.

On November 22, niu technologies closed up 2.78%. Considering the slight increase of 0.56% on the previous trading day, after nearly two months of stock price correction, niu technologies seems to show a certain trend of halting the decline. From the market perspective, niu technologies' stock opened lower on November 22, quickly dropping to the recent low point of $1.73, down 3.89%, but subsequently fluctuated upwards, with the price rising rapidly to a high of $1.86 three hours after the opening. Although there were fluctuations after lunch, with the increase even narrowing to 0.83% at one point, niu technologies' stock price ultimately relied on the late trading support to rise above $1.85, locking in an increase of 2.78%.

From the perspective of capital trend, on November 22, the overall trend was still dominated by outflow, with an inflow of $0.2576 million that day, of which small orders accounted for the highest proportion of the inflow, reaching 24% of the total capital flow at $0.1439 million. The outflow that day was $0.3543 million, of which large orders accounted for the highest proportion, making up 20% of the total capital amount.

From the data, although niu technologies' stock price has fluctuated, it has shown a net outflow of capital for four consecutive trading days, which is related to the accumulation of a large amount of trapped position cost distribution due to the previous decline in stock price.

The Zhitong Finance APP observed that after reaching the high point of the stock price range during trading on October 7, the block orders of niu technologies began a "violent wash" mode the next day, resulting in a "six consecutive declines" after October 7, pushing the stock price down to a low of $2.35, approaching the average cost line from October 7. On October 8, 9, and 10, niu technologies' volume was 2.1433 million shares, 1.406 million shares, and 973,300 shares, respectively. As the stock price subsequently dropped near the average cost line, the trading volume plummeted in the following three days. By October 16, the first trading day after the six consecutive declines, niu technologies' volume was only 0.3114 million shares.

At this point, the block orders did not choose to continue probing downward to force the trapped positions above to sell at a loss, but instead, on October 21 and 28, two waves were used to pull the stock price back above the average cost line, aiming to liberate the trapped positions near the average cost line and achieve the purpose of accumulating shares. Starting from October 30, niu technologies' stock price began to run continuously below the cost average line, a process lasting nearly a month.

From the position cost distribution chart, comparing the situation on October 7, on November 22, niu technologies' profit ratio dropped from 91.53% to 14.52%, with 70% of the positions concentrated in the range of $1.86 to $2.76, and the overlap of the 90% position cost distribution dropped to 57.69%, indicating that the company's stock price volatility has increased.

Although niu technologies' stock price has been operating at a low for over a month, currently, its block order wash has not yet ended. According to the Zhitong Finance APP, during the wash process, block orders used various means to clean out the indecisive positions in the market, forcing investors with low-cost holdings to sell, while new investors bought in at relatively higher prices, thereby overall increasing the average holding cost of market participants. By raising the average cost, the selling pressure faced by the block orders in the subsequent price increase process will be relatively reduced, which is beneficial for the stable rise of stock prices.

From the above figure, it can be seen that on November 22, niu technologies' average cost is the same as on October 7, both at $2.34. Moreover, the position cost distribution peak near the average cost line has not completely formed, and there are still many high-priced trapped positions that have not been sold, which may indicate that the so-called "wash" has not yet ended.

Why say the Q3 financial report may become the "guiding factor"?

After announcing the Q3 financial report on November 18, the secondary market ignored its revenue growth and overseas business growth, choosing to continue to decline. This trend seems to indicate a divergence between the secondary market and the company's fundamentals, but combined with the situation of block orders "not yet finished washing out," it may mean that the financial report of niu technologies could be the key for investors' next layout.

Financial data shows that niu technologies' Q3 revenue was 1.024 billion yuan (RMB, the same applies here), a year-on-year increase of 10.5%; gross margin was 13.8%, compared to 21.4% in the same period last year; net loss was 40.9 million yuan, compared to a net loss of 79.4 million yuan in the same period last year; the adjusted net loss was 34.2 million yuan, compared to an adjusted net loss of 70 million yuan in the same period last year.

Corresponding operating data shows that its Q3 electric scooter sales were 312,405 units, a year-on-year increase of 17.5%. Among them, electric scooter sales in the china market were 259,094 units, a year-on-year increase of 12.4%; electric scooter sales in overseas markets were 53,311 units, a year-on-year increase of 50.3%. As of September 30, 2024, niu technologies had 3,345 franchises in china, and the international sales network expanded to 57 dealers covering 53 countries.

From the above data, it can be seen that niu technologies' strategy in Q3 was quite clear, maintaining a high-end electric bicycle market domestically while vigorously expanding overseas. In particular, the decline in niu technologies' gross margin this quarter has attracted market attention, and according to the financial report, the company stated that the gross margin decline was due to a higher proportion of electric bicycle sales in the international market, changes in the product mix of electric scooters, and increased sales incentives for franchises in the china market. In short, niu technologies is maintaining its competitive edge in the high-end market domestically while also developing overseas market channels.

Moreover, while promoting the construction of market channels, niu technologies has also achieved cost reduction and expense control, with only a small increase of 4.1% in sales expenses year-on-year, while R&D expenses and management expenses decreased by 22.4% and 66.4% year-on-year, respectively, leading to a further narrowing of net losses, and the company is overall moving towards the breakeven line.

Finally, the company also stated in its financial report that it expects the Q4 revenue this year will be between 0.622 billion and 0.718 billion yuan, a year-on-year increase of 30% to 50%.

Overall, this Q3 financial report from niu technologies carries a strong implication of being "a link between the past and the future." In recent years, the topics of overseas demand and supply for electric bicycles have been increasingly mentioned, and the huge market demand is becoming a guarantee for the increase in domestic electric bicycles going overseas.

According to the research organization Market Research Future, the "Electric Two-Wheeled Vehicle Market Information Report" indicates that by 2030, the market size for two-wheeled electric vehicles will exceed 100 billion dollars (approximately 700 billion yuan), with a compound annual growth rate of 34.57% from 2022 to 2030, presenting new opportunities for chinese two-wheeled electric vehicle enterprises. Currently, north america, europe, and southeast asia are the main export destinations for chinese two-wheeled electric vehicles. In north america, the usa is the main typical export country, and the usa is relatively open to chinese two-wheeled electric vehicles, with the number of two-wheeled electric vehicles exported from china to the usa reaching as high as 4.564 million units in 2023, accounting for more than 30% of the total export volume.

Niu technologies has given a growth expectation of up to 50% for Q4, which is not unrelated to the huge market demand overseas. Considering the current low-level consolidation in the secondary market, block orders still have nearly a quarter of the time to fully wash positions. If there are no "black swan" disturbances during this period, the time around the 2024 Q4 financial report may be an important window for laying out plans for Niu technologies.