Niu Technologies

Good day, ladies and gentlemen. Thank you for stopping by and welcome to the NIO Technologies third quarter 2020 earnings conference call. At this time, all participants are in a 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 Niong. Investor Relations Manager of NEO Technologies. Mr. Yang, please go ahead.

Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss NEO Technologies results for third quarter 2020. The earnings press release, conference presentation, and financial spreadsheets have been posted on the news and investor relations website. This call is being webcast from companies on our website, and the replay of the call will be available soon. 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 and certainty 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 findings 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 list call include discussions of certain non-GAAP financial matters. The press release contains a definition of non-GAAP financial matters and a recalculation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr. Yan Li, and our CFO, Mr. Ali Zhang. Now let me turn the call over to Yan.

Thanks Jason and thanks everyone for joining us on the call today. We have had a strong growth in Q3 with our total sales volume reaching 251,000 units, a 67.9% year-over-year increase. The sales volume in the China market reached 245,000 units, a 70% year-over-year increase, where the volume in the international market reached 5,600 units, a 6.3% year-over-year increase. Now in the first three quarters, our sales volume reached 451,000 units, an increase of 43% compared with last year. Now our strong growth in China was driven both by the market factor and our operation performance in the new product rollout marketing and channel expansions. Now first let me quickly comment on the overall market landscape in China. Now the overall electric bicycle market has increased by 30% to 22 million units in the first nine months. according to the Ministry of Industry and Information Technology. This increase was driven by three factors. First, the post-COVID-19 sentiment led to a high demand of individual mobility devices as more people find electric bicycle a more convenient, safer means for the daily commute. Now, second, with the adoption of 2019 China electric bicycle standard, more cities started to regulate this industry with license plates, removal of uncompliant products, and such created a safer environment for the users. And lastly, with the lithium-ion battery costs continue to decline, the electric bicycle with portable lithium-ion batteries become more affordable. It was estimated that 20-30% of electric bicycles this year are lithium versus 10-15% in 2019. Now amid the fast growth of electric bicycle market, and in particular the lithium-ion based ones, We also accelerate our effort in new product rollout, marketing, and channel expansion. As we mentioned in the last earning call, we introduced the M2 model in Q2 and the MS model in July. Both M2 and MS inherited the family design of our signature M product, viewed as a full-cover electric bicycle. In Q3, M2 and MS series accounted for 18% of our total sales volume. Meanwhile, we also enriched the Goa series family with our G0, G2, and Upgrade G3 series. G0, an entry-level product, was launched at the JD June 18 campaign. With G0, G1, G2, G3, the Goa series now serves the full range of customers' needs from electric bicycles to electric motorcycles in China, with prices starting at 2299 RMB. The entire Goa series sales accounted for 37% of our total sales volume in Q3. Now, the successful launch of M and G series continues to demonstrate our strong capability in product design and rollout. Furthermore, with G series entry price at 2299 RMB, it allowed us to cover the mid-end consumer segment and open up more markets in the lower tier cities, which accounted for more than 70% of electric bicycle market. Now supported by the newly introduced product, we continue to expand our footprint throughout store expansions and new market entries. Now in Q3, we increased our dedicated branded store to 1,266 stores, an increase close to 200 stores as compared with Q2. This quarterly new store ad was an all-time high as we significantly increased our effort in retail expansion. Despite the fast increase of number of stores, our per store sales also increased by 40-50% in Q3 year-over-year compared with the same time last year. This demonstrates the healthiness of our retail operations as all retail stores enjoyed a sales growth and were highly profitable. This is also a good indicator for future retail expansion. We are accelerating new store openings in Q4 this year as well as in 2021. Furthermore, with the Gova series, we were not only able to consolidate our leadership position in top tier cities, but also able to build a good retail presence in the lower tier cities. To support retail expansion, we also scaled up our marketing activities in Q3. On the mass media front, we kicked off a Back to the Street, This is New campaign and partnered with the hottest online competition show called Street Dance of China in Q3. This campaign was a coordinated effort of advertising in the online show with more than 200 million views, interaction with all social media channels like the WeChat and Weibo, and offline advertising in subways and buses. It generated a total of 800 million brand exposures and continued to enhance our brand image as a cool lifestyle brand. We also continued to build our brand image with co-branding efforts. This time we worked with the Gundam, a popular Japanese cartoon in China, and rolled out a Gundam special edition based on our MS product. This co-branding has received quite a bit of market hype with close to 50 million views of new Gundam content across multiple channels. Now let me turn over to the overseas market. Our overseas market reached to 5600 units, a small growth of 6.3% year-over-year. Well, in fact, we had about another thousand orders in Q3 not able to ship in time due to the scarcity of international shipping. Now, even without this delayed thousand orders, this demonstrates a swing back to normality in the overseas market as our Q2 sales overseas were actually down by 62% year-over-year. This is only the start as most of the people in our core demographics are working from home So as more individuals go back to work, we will continue to see growth across our markets for individual mobility. In Q3, we will also increase our flagship and premium stores to 114 from 91 in Q2. And year to date, we have added 88 flagship premium stores, with now more than 40% of our sales from branded flagships and premium stores. Similar to China market, we will continue to expand our retail footprint with branded flagship and premium stores for Q4 and 2021. Along with our retail expansion, we have also up our effort in the social media with close to 800,000 interactions on Instagram and Facebook. Now while we are watching closely the COVID-19 situation globally, we're quite confident that our international sales will return to the healthy growth in Q4 this year. Now I will turn the call over to Harley to discuss our financial results.