reports: Citi lowers NIU Technologies target to $2 following disappointing FY23 results reports: Citi lowers NIU Technologies target to  following disappointing FY23 results

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On Monday, Citi adjusted its outlook on NIU Technologies (NASDAQ:NIU), a company known for its electric two-wheeled (E2W) vehicles. The company reduced the price target to $2.00 from $2.40 previously, while maintaining a neutral rating on the stock. The move comes after NIU Technologies announced its financial results for fiscal 2023, which fell short of expectations.

The company experienced a significant year-over-year revenue decline of 16%, totaling RMB 2,652 million. Additionally, net loss for the year stood at Rmb272 million, a stark contrast to the previous financial year’s profit of Rmb9 million. These numbers are below market forecasts and Citi’s own forecasts.

In the fourth quarter of 2023 alone, NIU experienced a revenue decline of 22% year-on-year and 48% quarter-over-quarter (QoQ), amounting to RMB 479 million. The net loss for the quarter widened significantly by 251% year-on-year and 64% quarter-on-quarter to RMB 130 million. The disappointing quarter was attributed to several factors, including a 1% year-over-year and 48% quarter-over-quarter decline in E2W sales volume, as well as a 22% year-over-year decline and of 4% quarter-on-quarter in E2W’s average selling price (ASP). These declines were linked to the broader global economic slowdown, slowing consumer spending and the company’s shift to more premium products.

Other challenges faced by NIU include a sharp contraction in margins. This was due to a change in product mix and reduced economies of scale, which negatively impacted profitability. Despite a slight recovery in the sales network, with an increase of 22 QoQ stores, the full year saw a net reduction of 246 stores, indicating a challenging retail environment for the company.

NIU Technologies’ financial performance over the past fiscal year and quarter reflects the impact of global market conditions and strategic choices on the company’s results. With the adjusted price target, Citi signals caution to investors regarding the company’s near-term prospects.

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