(report producer/analyst: CITIC Securities Ma Wangjie)
01. The two-wheeler giant
historical evolution
company was established in 1999 and entered the electric bicycle industry in 2004. It is one of the earliest electric bicycle manufacturers in China.
company's main business is the research and development, production and sales of electric bicycles, electric moped , and electric motorcycle . Through the shaping and promotion of the "Emma" brand, the integration of the supply chain and the management of the marketing network, the company has established a relatively systematic and comprehensive marketing network across the country.
After years of development, the company has a high market share in the electric bicycle industry and has become a leading enterprise in the electric bicycle industry. The "Ema" trademark was recognized as a well-known trademark in China by the Trademark Review and Adjudication Committee of the State Administration for Industry and Commerce in 2011. The Emma brand has become the number one brand in the electric vehicle industry in China Brand Power Index (C-BPI) guided by the Ministry of Industry and Information Technology for many years.
Equity Structure
Founder Zhang Jian is the controlling shareholder and actual controller of the company, and Zhang Gege is the actual controller of the company. Among them, Zhang Jian holds 282 million shares of the company, accounting for 83.36% of the total number of shares before the company's issuance and listing. Zhang Gege is Zhang Jian's daughter. Through the employee shareholding platform Changxing Dingai, he indirectly holds 4.57 million shares of the company, accounting for 1.35% of the company's total share capital.
executive team is highly bound to the company's interests. In addition to the actual controller, its joint actors and company promoters, other senior management team members Hao Hong, Li Yubao, and Wang Chunyan, , each holds 0.5% of the company's equity, Hu Yupeng and Zheng Hui received 200,000 shares and 400,000 shares (the total share capital accounts for 0.05% and 0.10% respectively). Senior executives' shareholding effectively binds the interests of management and the company, thereby achieving the stability and health of the corporate governance structure.
Product end: Fashion design gene runs through the company's development history
In the years of development history, the company has been continuously making efforts around the appearance design of the product end. From the company and many experts to establish a popular color research and development base for the electric vehicle industry in 2014, to the company's early spring product tasting meeting released five popular color colors for the early spring electric vehicle in 2022, focusing on the appearance design and appearance innovation of electric two-wheeled vehicle , the company continues to make efforts and always ranks at the forefront of the industry.
Channel end: The company has formed a sales network all over the country
Currently, the company has more than 2,000 distributors, and the sales network covers the whole country. According to sales by region, East China, Central China, and , South China, is the core sales area, contributing nearly 70% of the company's business revenue.
Financial performance: Revenue has grown steadily, and the new national standard has accelerated after the implementation of
From the perspective of the company's financial performance, revenue side: overall, maintain a sustained growth trend. Since the implementation of the new national standard in 2019, the growth rate has increased due to the expansion of short-term market space; profit side: Before 2019, the fluctuation has been greatly affected by factors such as industry competition. After the new national standard, although the profit margin of bicycles is relatively compressed, the profit side still maintains steady growth due to factors such as the increase in total volume.
Financial performance: Profitability fluctuates greatly due to market competition, and the fee rate shows a significant downward trend driven by scale effect
From the perspective of changes in the company's historical profitability, the market competition environment is the main influencing factor. The company's two significant declines in profitability in 2017 and 2020 were caused by the short-term deterioration of the industry's competitive environment and the price war. After 22 years of entering, the company's profitability has ushered in a clear turning point due to the optimization of the company's product structure.
Judging from the changes in the company's fee rate, with the gradual expansion of the company's revenue volume, the overall rate of various fees has shown a downward trend year by year.
2 Review: The process of Emma's share from leading to relative decline
Related to the changes in the market position of two leading brands Emma and Yadi , the electric two-wheeler market 21 years ago can be roughly divided into three stages:
.1 Yadi has frequently expanded production after 16 years and has been very strong. During the same period, Emma's production capacity layout was slightly conservative
Yadi's recent production layout process basically corresponds to the company's share improvement stage.
1) The pace of production expansion has accelerated after 2016, but the overall pace is not large. By 2019, the company's production capacity has steadily increased to 8 million units;
2) In 2020, Yadi seized the market opportunities brought by the new national standards and built three new production bases in Anhui, Chongqing and Vietnam that year, with a total production capacity of 15 million units, which is nearly doubled compared with 2019.
As of 2021, the company's production capacity has expanded to 17 million units, an increase of 11 million units compared with 2018.
Yadi's production capacity layout provides sufficient guarantee for terminal sales. During the same period, Emma's sales have reached the upper limit of production capacity
Compared with the capacity layout at the same time, Yadi is significantly better than Emma in terms of capacity scale and expansion.
From the perspective of the correspondence between production capacity and sales, Yadi's sales/capacity ratio is basically 80% or below, that is, Yadi's large-scale production capacity layout provides a relatively sufficient capacity guarantee for the company's terminal sales; but in comparison, Emma's sales/capacity has basically touched the ceiling during the same period, that is, production capacity has become a bottleneck restricting the company's sales to a certain extent.
.2 After 19 years, Emma's investment promotion progress began to lag relatively behind, and the gap between store layout and Yadi widened
Judging from the data from 2015 to 18, although the number of Yadi dealers in the early stage had a certain leading advantage compared to Aima, Emma made some efforts in investment promotion after 15 years and gradually surpassed Yadi in dealer layout. After the new national standard of
19 was implemented, Yadi began to make significant efforts, and Emma's channel layout was relatively backward.
The new national standard policy in 2019 was officially implemented, and Yadi took advantage of the opportunity to accelerate the expansion of dealers and stores.
By expanding its investment efforts, the company's number of stores increased from 9,000 to 12,000 in 2019, and reached 28,000 in 2019. During the same period, Emma also focused on accelerating the investment progress, but the speed was relatively slow. As of 21, the number of stores was about 20,000, which was nearly 40% different from Yadi.
.3 Different brand positioning makes the product different structures
Due to the differences in brand positioning and the industrial clusters in which they are located, Yadi and Emma have different product structures since its establishment. Emma is based in the Tianjin bicycle industry cluster and focuses on simple electric self-products, mainly targeting household users such as commuting and schooling; Yadea, which started with the Jiangsu motorcycle industry cluster, focuses on electric motorcycle models with higher unit prices, and electric scooter models account for a higher proportion in the product structure. Affected by product structure differences, Yadi has a higher factory price than Aimai.
is limited by the low profit space, and Emma is difficult to occupy an active position in the price war
Due to the differences in product structure, Emma has a lower profit space than Yadi, and it is difficult to occupy an active position in the industry price war. Looking back at the two rounds of price wars in the industry in 2017 and 2020, Yadea has seized its share by actively increasing the proportion of simple electric bicycles and promoting promotions and concessions. In comparison, Emma has a high proportion of simple electric bicycles and low profit margins, and it is difficult to seize users through greater promotions in price wars, so the share of the price war has been lost to a certain extent.
3 Entering 22 years, Emma has started a high-growth period of "both volume and price increase" performance
From the company's performance in the first half of 22, the "volume" dimension 22H1 The total sales of electric vehicles in the first half of 2019 was 4.9598 million units, an increase of 20.13% year-on-year, basically continuing the growth trend since the implementation of the new national standard in 2019; the "price" dimension of the company's average ex-factory price of electric two-wheeled vehicles reached 1,798.64 yuan in the first half of this year, a significant increase of 8% year-on-year.
driven by the trend of "both volume and price increase", the company's net profit attributable to shareholders increased by 119% year-on-year.As Q37-August enters Q37, the average price of Emma electric two-wheeled vehicles is still steadily increasing month-on-month.
Bicycle perspective, the increase in average price has driven a significant increase in profit space in 22 years
From the perspective of bicycles, the increase in profit space brought about by the increase in average price of bicycles is the core highlight.
can be seen through the split of the following table that through the continuous optimization of product structure, the company has escaped the low-price competition in the industry in 20-21 years, and the average bicycle price in 22 years has rebounded significantly.
Although product upgrades have also increased the cost of raw materials for bicycles in 22 years, the greater increase in the average price has significantly expanded the profit margin of bicycles. Compared with the whole year of 21, the net profit of 22H1 bicycles has increased by about double.
If we start from Emma's outstanding performance in H1 in 22 years, we can see that the company's product structure optimization that has been continuously promoted since 21 years has made significant contributions to its performance in the first half of this year. At the same time, we should also pay attention to the company's continuous layout on the production capacity and channel side since its listing will continue to drive the company's performance growth in the future.
In summary, we judge that since the first half of 2022, the company has started a period of high performance growth.
.1 After listing, the company continued to promote the construction of production bases, and the production capacity expansion and upgrading trend accelerated
sorted out the company's production capacity layout process. After listing, the production capacity layout process accelerated significantly:
1) In the IPO fundraising project, Emma raised 640 million yuan to build a production base with a total capacity of 900,000 electric bicycles in the sixth phase;
2) From July 21 to July 22, the company decided to invest a total of 6.15 billion yuan in Chongqing, Taizhou , Lishui , and Guigang, Guangxi, respectively, and plans to build four new production bases;
3) In July 22, the company collected funds for the aforementioned Lishui Smart Travel Project through by issuing convertible bonds . After reaching full production, it can contribute 3 million electric two-wheeled vehicles. In addition, unlike traditional production lines, the automation level of Lishui Smart Travel Project has been greatly improved. While effectively reducing labor costs, it can further improve the production capacity of intelligent electric two-wheeled vehicles, thereby fully meeting the latest consumer needs of the current market.
Under the vigorous layout, Emma's production capacity gap has decreased compared with leading companies
From the perspective of mainstream manufacturers' production capacity layout in the past three years, in order to seize the huge market opportunities brought by the implementation of the new national standard policy, manufacturers represented by Yadea have all laid out production capacity expansion processes in recent years.
In the past few years, Emma's production capacity layout was relatively backward, but with the gradual production bases in Chongqing and Lishui in the next two years (the Taizhou and Guigang projects have not been considered, and the Tianjin projects have reached full production), Emma's production capacity will increase to 14.72 million units from 8.7 million units in 21 years. Although the current Yadean production capacity is relatively small, it will still narrow the capacity gap between Emma and leading brands to a certain extent.
.2 Store decoration and renovation, relying on channel upgrades to create a better brand image
21 In 21, the company will use approximately 500 million yuan of the funds raised by IPO to upgrade terminal store image nationwide. As the core contact point for consumers to contact and understand the brand, offline stores have greatly affected the brand's image in the minds of consumers.
company uses the funds raised to renovate old stores nationwide. While enhancing the brand image, it can further tap the sales potential of the original store, thereby further tapping the sales increase on the basis of existing channels.
From the perspective of the project process, the company will upgrade and renovate a total of 3,772 stores in batches within 22-24 years and into four major types of stores.
channel upgrade and expand again. Within three years, the number of stores will increase by 50% on the existing basis
According to the recently disclosed convertible bond issuance plan by Emma, the company will invest about 500 million yuan to build new terminal stores in areas with greater consumption potential in the country based on the existing channels and subsidize them.
From the specific process, in the next three years, the company will add 11,463 new stores nationwide (highest in East China) (including 6 store types including city flagship stores, city standard stores, etc.), and the total number of stores will reach 36,000 by then, which is about 50% higher than the current number of company stores (the number of stores as of the first half of 2022).
.3 The product side focuses on exploring the needs of different segments, and personalized positioning drives the increase in average prices
21, Emma separates the existing product characteristics through multi-brand strategy and makes efforts to different segments.
Emma, as the main brand, focuses on high-end fashion products, and continues to promote the increase in the proportion of mid-to-high-end products with the help of the engine max series; the sub-brand Xiaopa focuses on high-value and literary products, focusing on young women; Sperzman focuses on the sinking market, meeting the needs of consumers in the township through long battery life and strong motivation.
Compared with the "road vehicles" covering various consumer groups, products that target different segments can better meet consumers' personalized needs, and can often break out of simple price competition and achieve higher product premiums, thereby increasing the overall average price of the brand.
3.3.1 Relying on the main brand Emma, the engine max series continues to increase in volume
Emma's main brand products focus on high-end. In January 2019, the engine max system was officially launched. Relying on technologies such as Juneng Motors, graphene battery , etc., the product endurance and power performance are significantly improved compared with the original electric two-wheeled vehicle products.
Thanks to this, the sales of the engine max series products in the year it was launched were close to 1.85 million units, accounting for 21.33% of the total sales that year. The average price of A500, Da Qiao, Nina and other series of products equipped with this system has been significantly higher than that of traditional road vehicles before, and have become popular products recently with their excellent performance.
3.3.2 Sub-brand Xiaopa obtains product premium through its appearance and soft power, while Sportsman strives to sink the market
Xiaopa effectively hits the demand for urban women for fashionable and cute electric two-wheeled vehicle products through retro and literary product design and the creation of multiple IP images. In addition to traditional battery life and hard power indicators, it effectively obtains a higher product premium.
Compared with Emma and Xiaopa, the Spitzman brand focuses on high-end urban populations, the Spitzman brand mainly focuses on third- and fourth-tier cities and express delivery and takeaway delivery markets. The brand's products focus on high cost performance. On the one hand, they strive to improve product endurance and power performance through the upgrading of motor and battery technology, and at the same time set prices with market competitiveness.
Profit forecast and valuation
point business revenue forecast
We expect the company's total operating income from 2022 to 2024 to be 20018/23.632/27.215 billion yuan, respectively, which will achieve a rapid growth of 30.0%/18.1%/15.2%.
points for business:
1) Electric bicycle: On the one hand, the implementation of the new national standard policy in the short term will still drive the short-term pre-replacement demand. At the same time, under policy restrictions, the cost of electric motorcycles will increase, and the proportion of electric bicycles will increase. The above two factors make the sales of electric bicycles still expected to achieve continuous growth in the future. In addition, driven by the company's product structure upgrade, the average product price will also steadily increase, and it is expected to achieve a growth of 44.3%/22.2%/18.7% from 22 to 24.
2) Electric motorcycle: is affected by the new national standard policy, the proportion of electric motorcycle sales has declined in recent years. However, thanks to the trend of product strength upgrading in recent years, product sales can still achieve stable growth, and the average price continues to increase. It is expected to achieve a growth of 17.7%/13.4%/11.3% in 22-24.
3) electric tricycle : This subcategory is mainly used in rural and township markets. In the process of traditional fuel three-wheeled motorcycle being replaced by electric tricycle penetration rate still has room for gradual improvement. It is expected that the company's electric tricycle business will maintain steady growth in the future period, and it is expected to achieve a growth of 10.3%/10.3%/10.3% in 22-24.
gross profit end:
industry competition pattern has become stable, price war phenomenon has gradually decreased, and the company's product structure has continued to be optimized. It is estimated that the company's gross profit margins in 22-24 will be 14.55%/15.79%/17.20% respectively.
Cost side:
1) As the company's products gradually upgrade, the R&D expense ratio is expected to show a gradual upward trend.
2) As the company's scale gradually increases, the continuous release of economies of scale will steadily decline in sales and management expenses.
profit side: In summary, it is expected that the company's net profit in 22-24 will be 1.275/1.663/2.165 billion yuan, with a growth rate of 92.1%/30.4%/30.2%, and the corresponding PE is 22.1/17.0/13.0 respectively.
Risk warning:
1) New products perform less than expected. If the new products cannot obtain market recognition, the company's product structure optimization trend will be affected to a certain extent.
2) In the short term, the industry competition is intensifying, and there is still a possibility of local small-scale price wars among the first-tier brands.
3) Production capacity and channel expansion is lower than expected.
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