Niu Technologies

Good day, ladies and gentlemen. Thank you for standing by and welcome to the NEO Technologies First Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I will turn the call over to Mr. Jason Yang. Investor Relations Manager of New Technologies. Mr. Yang, please go ahead.

Thank you, Operator. Hello, everyone. Welcome to today's conference call to discuss new technologies results for the first quarter 2020. The call is being webcast from company's IR website. Investor presentation and replay of the call will be available soon at ir.new.com. Please note today's discussion will contain forelooking statements made under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forelooking statements involve risks, uncertainties, assumptions, and other factors. The company's actual results may be materially different from those expressed today. Further information regarding the risk factors is included in the company's public filings with the Securities and Exchange Commission. The company does not assume any obligation to update any forwarding statement except as required by law. Our earnings press release and this call include discussions of certain Nangap financial matters. The press release contains a definition of Nangap financial matters and a reconciliation of gap to Nangap financial results. On the call we meet today are our CEO Dr. Yan Li and the CFO Mr. Hadi Zhang. Now let me turn the call over to Yan.

Alright, thanks Jason and thanks everyone for joining us on the call today. Now we have seen a decline in sales in Q1 2020 due to the impact of COVID-19. On the performance, the sales volume has decreased by 39% in Q1 2020 and the revenue has decreased by 34% respectively. We have maintained our gross margin at 23.6% but suffered a net loss margin at 11.3% in Q1 2020 due to the decline in sales. Only financial data were within our expectation. So now first let me give you an update on the impact of COVID-19. The impact on the business performance in Q1 was evident. So as mentioned in our last earning call, in China, most cities have shut down businesses for part or entire February. We started February with all our stores closed and ended with 65% of store open for business. Furthermore, as people were recommended to stay home and work from home, there were little retail traffic or retail demand. Since our sales heavily depended on offline retails, the shutdown of stores and the stay home quarantine policy have reduced our sales significantly. During those times, We purposely direct our sales efforts online both through our online shops on Tmall and JD platform as well as the omnichannel approach. In other words, online purchase, offline delivery mode. Particularly on the omnichannel approach, we train all our store operators to set up online virtual stores via WeChat and provide online sales consultations to potential customers. We further provided tools for individual store sales reps to generate e-flyers with personal WeChat account QR codes to be distributed in various WeChat groups for potential customer acquisition. Now our e-commerce sales increased by 1.6x in March and 3x in April over the same time last year. And online to offline orders have increased by 2.5x respectively. Now we started to observe recovery as business started to get back in operation. And nearly 100% of our stores opened by end of March. Although the retail traffic has not recovered to the same level of last year, our efforts of Omnichannel has led to very positive results. The per store sales has been improved by 12% year-over-year in the month of April. Now heading into June, the China retail market will most likely continue to improve as many cities like Beijing and Shanghai even suggested no mask necessary when outside. In addition, the need for personal commuting solution is very high. So we're quite confident and positive about the near future growth in China. Now our overseas sales has also been impacted in Q1 as mentioned last time. The overseas sales volume increased by 6% in Q1 with a very strong growth in January and February but a sharp decline in March as the COVID-19 spread out to Europe and many other countries. Nearly all our dealer stores were temporarily closed globally and just started to open up in late April or early May as countries like Germany, France, Italy started to lift the lockdown. Despite the lockdown, similar to domestic market in China, we leverage our online capability to generate customer leads or pre-sales. We launched an online pre-sales campaign in Europe on our newer model, the NGTS Sports model, priced at €31.99, with more than 650 units orders, while the actual product won't be delivered until a few months later. We're also about to kick off an online rental program across our dealerships network in Europe in June, allowing users to rent our rent scooters from our dealerships on a monthly basis. Although our flagship store and premium store build-out were temporarily stalled due to the lockdown, we continue to expand our market presence, entering market in South America like Peru, Guatemala. In addition, as social distancing became a temporary social norm internationally, we did observe a demand on individual mobility solutions as people tended to stay away from the public transportation. This trend might increase the total addressable market in a permanent way when people try out electric scooters and started to enjoy the technology, the style, and the freedom our products offer. Hence, although international market won't recover as fast as China market, we remain very positive about our overseas business performance this year. Now, despite the impact of COVID-19, we were able to quickly resume our product development and business operation and reduce the time delay in new product introduction this year. First, we launched our MQI2 on May 7th, our flagship electric bicycle product for China market in 2020. In 2016, we introduced our M1 model, which was the first mobility product that has won all seven major international design awards globally in the past 20 years. M1 was one of our hottest models since then, but due to China's new regulation on electric bicycles in 2019, we had to stop production of the M1. After more than one year of design and development, we were able to finally introduce the MQi2, which inherited the design of our signature M1 product with a sporty design, mid-mounted suspension, all-in-one dashboard, and fully compliant with the new regulations in China. On the technology side, the M2 product line Inherited the new technology platform used on MGT included the version 35 cloud ECU with remote K-leaf ignition capability, automobile-level lighting system, and the new energy powertrain management with the driving range up to 75 kilometers. The M2 product comes with two specs priced at 4599 RMB and 5199 RMB. which we believe will set the technology and design standard for the China electric bicycle industry. So we held our M2 launch with a new format known as Zhibo or online live streaming at Taobao platform with Token Hu, our co-founder, and me as the sales rep. This new format started to become a very fashionable trend in China, partially driven by the lockdown. Our 4-hour live streaming attracted more than 3.5 million unique viewers from around China and racking up more than 3.7 million likes. Together with the product launch, we started a new product media campaign in China, received more than 600 media article mentions, with 30 million reads, 10 million views on Weibo, and 100 million views on Douyin and Kuaishou. So we believe the M2 product will help further expand our product adoption in China market while also allowing existing customers to upgrade to this new model. We also introduced our GZERO product in our Gowa series, actually just yesterday. The GZERO is also beautifully designed and equipped with many practical features such as a baby seat. It is a lithium battery-based product and with smart features as add-ons. The GZO comes with two models priced at 2299 RMB and 2799 RMB. The GZO product is the product that will be our entry-level product for the new family, and it will allow for a new customer segment to enter into the new ecosystem. Now, second, we'll continue to expand our accessory lines to further enhance our lifestyle brand image. We roll out a newly designed full coverage and half coverage helmets in April and for that category achieve almost a 10x sales growth year over year. We also launched a battery warranty services together with insurance companies and with around 2,000 users signing up for the supplementary services plan in the first month. Now besides the new product launch, we continue to enhance our brand awareness through viral marketing and targeted marketing. Now besides our new product launch, MQI2, leveraging our new product launch introduction, we had a famous Chinese Drupal figure Luo Yunhao to introduce MQI2 in his online sales channel in Douyin, resulting in nearly 7 million views. We continue to build our own site on short video platforms like Douyin and Kuaishou, with Douyin quarterly views doubling to 40 million views in Q1 2020. Now internationally, despite the impact of COVID-19 virus, we added three QOs to our new crew team of creators. The highlight was our blockbuster video of NIU with the packed tour shot at Zurich, Switzerland. Now, I will turn the call over to Hardy to discuss our financial results. Hardy.