① Emma Technology plans to invest 2 billion yuan to build the Lanzhou New Area Industrial Park project. At the end of April, the company also plans to invest 3 billion yuan to build the Fengxian Industrial Park project; ② The company is facing performance pressure. This year, the first quarter revenue decline since listing occurred, and the net profit growth rate slowed sharply compared to previous years; ③ With the slow end of the wave of non-national standard vehicle replacements, the slowdown in the growth rate of the domestic electric two-wheeler industry has become a common phenomenon.
Finance Association, May 31 (Reporter Wu Chao) At a time of increasingly fierce competition in the electric two-wheeler market, Emma Technology (603529.SH) experienced its first quarter revenue decline this year for the first time since its launch. The company announced this evening that it plans to invest about 2 billion yuan to build the Emma Lanzhou New Area Industrial Park project in Lanzhou New Area, Lanzhou City, Gansu Province. This is Emma Technology's second major investment decision in just over a month, highlighting the company's strong desire to seek new growth points.
According to the announcement issued by Emma Technology, the company signed an investment agreement with the Lanzhou New Area Management Committee to invest in the construction of the Emma Lanzhou New Area Industrial Park project through the establishment of a project company in the Lanzhou New Area. The total planned investment of the project is about 2 billion yuan, and the company plans to resolve it through its own capital and direct or indirect financing.
Emma Technology believes that the company is currently investing in the construction of a production base in Lanzhou New Area, Lanzhou City, Gansu Province, to further expand the production capacity of electric two-wheelers and electric tricycles, which is conducive to improving the company's production capacity layout in the northwest region, meeting the company's future market expansion and business development needs in the northwest region, and in line with the company's long-term development strategy plan.
In addition, a month before this investment plan, Emma Technology also issued an announcement on April 26 to sign an “Investment Agreement” with the Fengxian People's Government of Xuzhou City, Jiangsu Province, to invest 3 billion yuan to build the Emma Technology Group Fengxian Industrial Park project to further expand the production capacity of electric tricycle products.
It is worth noting that Emma Technology's investment decisions were made in the context of performance pressure. Financial data shows that in the first quarter of 2024, the company achieved revenue of 4.954 billion yuan, a year-on-year decrease of 8.97%; net profit of 483 million yuan, an increase of 1.16% year-on-year. This is the first time since the company went public that revenue declined in the first quarter. The net profit growth rate slowed sharply compared to the same period in previous years, which also showed a certain bottleneck in growth.
In fact, the slowdown in the growth rate of the electric two-wheeler industry has become a common phenomenon. For example, in 2023, Xinri Co., Ltd. (603787.SH) achieved operating income of 4.106 billion yuan, a year-on-year decrease of 16.27%; net profit to mother was 87.9832 million yuan, a year-on-year decrease of 45.75 percent. Maverick Electric (NIU.O), which focuses on high-end two-wheeled electric vehicles, had revenue of 2,651.8 billion yuan in 2023, down 16.3% year on year; net loss for the whole year climbed to 271.8 million yuan, and continued to have a net loss of 54.8 million yuan in the first quarter of this year.
According to the “2024 China Two-wheel Electric Vehicle Industry Research” published by iResearch, the overall sales volume of domestic electric two-wheelers in 2023 was about 55 million units. The “New National Standard” policy released in 2018 spawned a wave of non-national standard vehicle replacements. With the gradual implementation of the policy, it led to 3-5 years of market growth; as the “New National Standard” policy slowly came to an end, sales volume in the domestic two-wheel electric vehicle market will return to normal replacement and a small number of additions.
Therefore, while seeking to expand production capacity, Emma Technology must also ignore the risks involved. The company also mentioned that in addition to factors such as large scale of investment, uncertainty in competition for land use rights, and complicated project approval processes, there are certain uncertainties about industry trends, changes in market conditions, and the ability of the management team to expand the business, so there are certain risks in achieving future operating benefits.