Before the US stock market on May 20, Maverick Electric (NIU.US) announced its results for the first quarter of 2024. Financial reports show that Maverick Electric's current revenue increased 21% year on year, and net loss narrowed further compared to the same period last year. However, the performance of the secondary market clearly deviated from its upward performance. The Zhitong Finance App observed that on May 20, the stock price of Maverick Electric opened low. At one point, it fell by more than 14%, and finally closed down 10.88%.

If the timeline is lengthened, investors can easily see that this two-wheeled electric vehicle company founded in 2014 was listed on the NASDAQ in just four years. The peak stock price reached 53.38 US dollars, and the market capitalization reached 4.14 billion US dollars, but now the market value of Maverick Electric has dropped 96% from a high point.

And this may be related to the current business problems faced by Maverick Electric. According to financial data, domestic competition for Maverick Electric is becoming increasingly heated. Currently, its growth mainly comes from overseas markets, but with the arrival of a wave of domestic two-wheeled electric vehicles going overseas, it is still unknown whether Maverick Electric can successfully “defend the city” with its own products.

Competition is heating up, focusing on marketing over R&D

According to financial reports, Maverick Electric's revenue for the 2024Q1 quarter was 505 million yuan, an increase of 21% over the previous year; the net loss for the current period was 54.8 million yuan, which is a further narrowing from the net loss of 60.3 million yuan in the same period last year.

Judging from operating data, the current sales volume of Maverick electric scooters was 1291,000 units, an increase of 36.8% over the previous year. By market division, the sales volume of electric scooters in the Chinese market was 110,000 units, up 35.1% year on year; the sales volume of electric scooters in the international market was 19,000 units, up 47.6% year on year.

Looking at the vertical comparison, revenue and profit for the 2024Q1 quarter showed a certain recovery year over year. This is also the first time that Maverick Electric's quarterly revenue achieved positive year-on-year growth after 6 consecutive quarters of stagnation or negative growth, but under the influence of the off-season, there is still quite a gap compared to the revenue scale of last year's Q2 and Q3 quarters.

Although from the revenue side, Maverick Electric achieved a certain recovery in performance in the Q1 quarter of this year, its performance on the cost side was not ideal.

According to the data, Maverick Electric's total current operating expenses reached 165 million yuan, an increase of 4.6% over the previous year. Although overall operating expenses increased by only a single digit, when split, its sales expenses were 105 million yuan, a sharp increase of 45.6% year on year; in contrast, Maverick Electric's R&D expenses were only 289.31 million yuan, down 17.35% year on year; management expenses were 306.13 million yuan, down 39.17% year on year.

What is behind this trend on the cost side is that Maverick Electric is rapidly expanding overseas markets while trying to stabilize the more competitive domestic market.

According to Maverick Electric's financial report, the high-end flagship product was Maverick Electric's sales highlight in the first quarter. On February 29, the “new generation performance flagship” released by Maverick Electric was highly sought after the NXT launch, and sales in the first quarter accounted for 26% of total domestic sales. However, high-end products have not increased the company's profitability. According to the data, the company's operating profit margin for the period was -14%, and the net loss rate for the same period was 10.9%. The company's explanation for this is that it “changed its domestic IDR sales policy and shared more growth profits with distributors to reclaim the Chinese market and strengthen the position of new products.”

However, in the face of market competition, it seems that the “high-end” of Maverick Electric has not been recognized by the consumer market. Financial reports show that in the 2024Q1 quarter, Maverick Electric's revenue per electric scooter was 3,908 yuan, down 11.6% year on year, showing that the company may be passing price cuts to cope with market competition; in addition, Maverick's net electric accounts receivable reached 87.2474 million yuan, accounting for 17.29% of current revenue; inventory value reached 481 million yuan, up 22.39% year on year. On the other hand, the above also reflects the difficulties faced by Mavericks in the domestic competitive market.

In order to avoid excessive “internal expansion” in the domestic market, the overseas market seems to have become a “lifesaver” for Maverick Electric's future growth.

Is going out to sea to save?

According to the Zhitong Finance App, Maverick Electric is actually the first smart electric vehicle brand to enter the domestic market, and was sought after in 2021 and before.

However, as competition in the domestic two-wheel electric vehicle market becomes more intense, emerging brands such as No. 9 and Luyuan, as well as traditional giants such as Yadi and Emma, have all begun to lay out the intelligent electric vehicle market.

Maverick's share and sales volume of smart two-wheeled electric vehicles has been overtaken by its peers. According to data from Anxin Securities, based on 2022 sales, Yadi, Emma, and Taling became the top three in sales in China's two-wheeled electric vehicle industry, while Maverick Electric only ranked 9th. By 2023, Yadi's two-wheeled electric vehicle sales reached 16.5 million units, Emma 11 million units, and Taiwan Bell 8 million units, while Maverick's electric vehicles were only 710,000 units.

In this context, overseas markets with huge potential are expected to become an emerging growth point for Maverick Electric.

According to the “Electric Two-Wheeler Market Information Report” released by the research agency Market Research Fury, by 2030, the two-wheeled electric vehicle market will exceed 100 billion US dollars (about 700 billion yuan), and the compound annual growth rate from 2022 to 2030 will be 34.57%. This will be a new opportunity for Chinese two-wheeled electric vehicle companies. At present, North America, Europe, and Southeast Asia are the main export destinations for Chinese two-wheeled electric vehicles. On the North American side, the US is the main exporter, and the US is relatively open to Chinese two-wheeled electric vehicles. In 2023, the number of two-wheeled electric vehicles exported by China to the US reached 4.564 million units, accounting for more than 30% of the total export volume.

Another potential market is Southeast Asia. The Zhitong Finance App learned that due to population density, low consumption levels, and low extreme weather, two-wheel travel has become the main mode of transportation in Southeast Asia, and it is also one of the regions with the highest number of motorcycles in the world. According to ASEANStats data, Southeast Asia currently owns around 250 million motorcycles. Under pressure from energy and environmental protection, the transition to electrification has become a major trend in the Southeast Asian two-wheeler market, yet the penetration rate of electrification is still low.

Currently, the electrification of motorcycles in Southeast Asia is still in its infancy. In the five major markets (Indonesia, Vietnam, Thailand, Malaysia, and the Philippines), with the exception of Vietnam, the electric penetration rate is less than 3%. According to Marklines, Yadi and Vinfast sold only 82,000 and 88,000 electric motorcycles in the five major markets of Southeast Asia in 2022. There is a significant gap with oil and motorcycle sales, and there is plenty of room for future development of electrification.

Judging from Maverick's global layout, in terms of channel construction, as of March 31, 2024, Maverick Electric had 2,888 domestic brand experience stores and specialty stores, and entered 54 overseas countries through 58 dealers. According to data released at the end of 2023, Maverick Electric currently has 2,856 stores in China, and its overseas sales network includes 56 dealers, covering 54 countries. Judging from financial reports, retail channels in the US and European markets have significantly boosted Maverick's overseas sales.

Looking at overseas market revenue in 2023, Maverick surpassed competitors with revenue of 350 million yuan, and its bicycle sales price from the international market was 3,204 yuan, far higher than the average export price of a two-wheeled electric vehicle in China of 2,131 yuan.

However, at present, brands such as Yadi, Emma, and No. 9 are all laying out overseas markets to seek new growth in two-wheeled electric vehicles. Maverick's overseas market expansion has also been impacted to a certain extent by this. Financial reports show that in the first quarter of 2024, electric scooter revenue in the international market was 49 million yuan, down 8.1% from 53.3 million yuan in the same period last year.

Therefore, in order to maintain its first-mover advantage in overseas markets, Maverick is also increasing sales investment. The company said, “It will also invest more money in brand building and channel building in domestic and foreign markets, so sales and marketing expenses in the international market are still at a high level.” The secondary market did not perform well after the Q1 earnings report was released. Perhaps they were worried that Maverick Electric would fall into heated competition in domestic and foreign markets, making it difficult for the company to reach the break-even line in the short term.