Niu Technologies (NIU) Q2 2021 Earnings Call Transcript

Niu Technologies (NASDAQ: NIU) Q2 2021 earnings call dated Aug. 16, 2021 

Corporate Participants:

Jason Yang — Investor Relations Manager

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

Hardy Peng Zhang — Chief Financial Officer

Analysts:

Vincent Yu — Needham & Company — Analyst

Bin Wang — Credit Suisse — Analyst

Winnie Dong — Piper Sandler — Analyst

Jing Chang — CICC — Analyst

Presentation:

Operator

Good day, and thank you for standing by. Welcome to the Niu Technologies Second Quarter of 2021 Earnings Release Conference Call. [Operator Instructions] Please advised that today’s conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to use first speaker for today, Mr. Jason Yang. Thank you. Please go ahead, sir.

Jason Yang — Investor Relations Manager

Thank you, operator. Hello everyone. Welcome to today’s conference call to discuss Niu Technologies results for the second quarter 2021. The earnings press release, corporate presentation and financial spreadsheets have been posted on Niu’s Investor Relations website. This call is being webcast from company’s IR website and the replay of the call will be available soon.

Please note, today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements involves 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 forward-looking statement except as required by law. Our earnings press release and this call include discussions of certain non-GAAP financial measures. The press release contains a definition of non-GAAP financial measures and the reconciliation recalculation of GAAP to non-GAAP financial results.

On the call with me today are our CEO, Dr. Yan Li; and our CFO, Mr. Hardy Zhang. Now let me turn the call over to Yan.

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

Thanks, Jason, and thanks everyone for joining us on the call today. So in the second quarter we’ll continue to see a strong growth in the China market, as we continued our new product rollout and the retail expansions. We also achieved decent growth in international market despite ongoing challenges of COVID-19 and the global logistics.

Our total sales volume reached nearly 253,000 units, an increase of 58% year-over-year. Sales in the China reached 246,000 units, an increase of 59% year-over-year, while the volume in international market reached nearly 7,000 units or 35% increase year-over-year. We are attributing our Q2 growth to the three key strategic executions, our targeted retail expansions, the release of new product that appear to a wider customer demographics, and our targeted marketing campaigns and user centric activities.

Taking where we left off in Q1, in the second quarter of this year, we added another 450 new branded stores across China, reaching total up 2,366 stores by June 30, and also setting a record for the most stores we have ever opened in a single quarter. This nearly 2,400 stores will serve as a strong base to drive sales growth in Q3. For the international market, despite the challenges of COVID-19, we continue to add 26 flagship and the premium stores with our total flagship and premium stores number reaching 149, in addition to our 1,000 plus dealers.

Now as we mentioned in our last quarterly update, we held our global product launch in early April where we introduced a large assortment of China International vehicles. We are happy to report that most of those products are now in the market or about to ship in the coming weeks. We are very excited about the speed that we can take products from concept to the market, giving us more agility to meet the demands of urban mobility market both in China and abroad. One of the key products from April event is MQi 2S. We began the sales of our M2S just a few weeks ago in late July. The new M2S is upgrade of M2, the flagship product under the new China national standard for electric bicycles. The M2S is equipped with our latest smart IoT technology, a color display with navigation that mirror your mobile phone and the OK G0 [Phonetic] system with distance sensing and a keyless ignition and also our latest battery management system new energy 7.0, which increase the drive range. We launched the M2S with a starting price of RMB5,600 up to RMB8,000. The market response has been great, especially in the top-tier cities where the M2S is viewed as the most higher electric bicycle product in the market.

Now shifting our discussion to our huge popular Gova series. The all new Gova S and the Gova C series has allowed us to expand our offerings for the mid-tier product categories and helped us to quickly tap into an even larger total addressable market in China. The Gova F series carry a more masculine design style and feature of new UQi Lite, which has been a hit with our new targeted demographics. As we mentioned in our last earning call, the Gova F0 set the jd.com pre-sales record for urban mobility product and had a significant impact on our sales volume growth in Q2, accounting for 24% of our total sales volume in the quarter ending June 30. The Gova F2 has being a very popular product despite being launched in late May, the F2 accounts for 6% of the total sales volume in Q2. And then we’re also about to launch the Gova F4 electric motorcycle product in the next few days, price from RMB 4,500 to 6,700.

Now once the other product coming out of April global launch was the Gova C0. The C0 was especially designed for female customers with multiple macron dessert flavor color choices than wide variety of accessories, taking into account the actual needs of women’s daily commute, from appearance and configurations to performance. The C0 is equipped it with our [Indecipherable] hardware, allowing the C0 to be connected to our new app just like our NIU series vehicles. The C0 had two versions differentiated primarily by the riding range of 50-kilometer standard range and 70 kilometer extended range options, affordably priced that RMB 3,430 and RMB3,800.

We also upgraded our Gova G3 vehicle in order to better meet the riding habit of the users in China’s second and third tier market. The all new G3 has seen a significant upgrade to performance, thanks to the update we made on the hub motor, the controllers, as well as the low-resistant tires. The G3 now can get 100-kilometer plus of driving range on a single charge. Now prior to those changes, the G3 accounted only for 5% of our total sales volume in Q2, but since our recent product update in July the all new G3 sales has quickly climbed to 16% of our total volume. The G3 is priced at RMB 3,700 to RMB4,000.

We’re also quite excited about our KQi3 kick scooters that we announced back in April. Just a few weeks ago, on July 13th, we launched our European and United States presales for KQi3 on Indiegogo [Phonetic] our e-commerce platform. The KQi3 is our first product of more to come in the micro mobility space, trying to tackle the last mile commute. Compared to the competition of same $700 price point, the KQi3 offers a better performance, a more stable ride and more color option. The KQi3 campaign our Indiegogo was fully funded in under 5 minutes and has raised over $1 million plus sales in little over three weeks with the support of more than 1,800 backers. As of today, the pre-sales volume for KQi3 has exceeded 2,000 units plus and the delivery will start in Q3. Additionally, the wholesale orders for the end of the year retail holiday sales in United States and Europe are already being produced too.

Now shifting gears a bit. The April global product launch helped us to kick off a new cycle of domestic and international communications. The launch either alone garnered more than 1,000 publications across hundreds of domestic, international media outlets, firmly established our position as a global market leader in urban mobility. Beyond traditional media, our team continue to accelerate growth and engagement on social media platforms. In the second quarter of [Indecipherable] channels has attracted more than 34 million views increase of over 400% year-over-year. We believe capitalizing on those channels not only broadened our exposures but more importantly, is being paid off in sales.

Now, I also want to share some very exciting news. We are very proud to announce the new scooter moped are responsible for powering 10 billion kilometers of traveling globally. In just a few short weeks, we’ll cross the 10 billion kilometers threshold and that we believe it is the important moment not just for Niu, but for the entire two-wheeled and the micro-mobility industry. This will be the first 10 billion kilometer ever recorded in the two-wheeler industry history. The10 billion kilometer milestone doesn’t simply prove that each day more people choose Niu to make their daily commute, but it also shows more and more customers are pushing the boundaries of how and why they ride Niu. The milestone shows aspiration of our new fans join us to redefine urban mobility and make life better. They represent the strength and vitality of our brand and when people think our urban mobility, they will first think of Niu.

Now to celebrate the 10 billion kilometer milestone with our Niu fan, we launched a variety of brand campaigns partnering with China influencers and tap into targeted TV ads to promote the new lifestyle. This was all coupled with the release of our all new limited addition NQi 10 billion kilometers scooter, paying homage to the orange M1 that launched the brand in 2015. These activities are perfectly timed to amplify our brand messaging during the peak sales seasons of 2021, in China.

And finally, I want to take a moment with some forward-looking state comments for Q3. We plan to keep our retail expansion momentum adding another 300 plus stores in Q3 despite the half-sale season. We have also ramped up our production capacity and recently brought up the Phase 2 of our factory online, increasing our annual capacity into more than 2 million vehicles and this will provide a good support to the third quarter shipment. The increased capacity comes in just in time for our back-to-school promotions running from August to September this year. Now with the launch of new product, expansion of our sales channel, coupled with the peak season promotions, we are very excited about the weeks ahead in the China market.

Now for the international market, we’re very excited with our successful launch of our KQi3 kick scooters and believe it will contribute significantly in our sales growth in the years ahead. However, in the near-term, our international market continue to be hindered by the COVID-19 situation in the European market and the shortage and the much higher shipping costs, which prevented us from supplying sufficient inventories for the retail sales in international markets.

Now I will turn the call over to Hardy to discuss our financial results. Hardy?

Hardy Peng Zhang — Chief Financial Officer

Thank you, Yan, and hello everyone. Our price release contains all the figures and comparisons you need. We’ve also uploaded the Excel format figures to our IR website for your reference. As I review our financial performance, we are referring to the second quarter figures, unless stated otherwise and that’s all my three figures RMB unless otherwise noted.

Our Q2 was sales ordering raised to 253,000 units, representing a 58% in year-over-year growth. China sales volume increased by 59%, mainly driven by new product launch. The two new models, F0 and F2 started delivery rates in the second quarter. They contributed to 30% of our total sales volume and are key drivers for the second quarter sales volume growth. International sales volume increased by 35%, slightly below our expectations. They continue with the challenges from COVID-19 and the international shipping. Both affected our sales and the delivery to the international markets.

With regards to product mix, the N series accounted for 11% of total sales volume, M series accounted for 14%, U series accounted for 19%, and Gova series accounted for 56%. Out of the 56% of Gova series, 30% was from the low price models, G0 and F0, remaining 26% was from other global models with relatively higher retail prices. The overall product mix improved this quarter compared with Q1, specifically the percentage of sales volume from the low price models G0, F0 reduced from 38% in Q1 to 30% in Q2. The improved product mix also led to a higher sales in the quarter compared with Q1.

Total revenues increased by 47% to RMB945 million within the guidance we provided earlier. The quality of revenues improved this quarter with better product mix, besides the improve the e-scooter product mix mentioned above. We also generated RMB130 million revenues from accessories, spare part and services, representing 98% a year-over-year growth and accounting for 40% of our total revenues. The strong sales mainly came in from battery pack sales to share new operators in the European markets. Our ASP in Q2 declined by 7% year-over-year, but improved by 2% quarter-over-quarter. Let’s look at the details.

For China market, the scooter ASP decreased by 9% year-over-year, mainly due to the sales of low-priced model G0 and F0, which account for 30% of total sales volume compared with the 14% in Q2 last year. However, when compared with Q1, the ASP increased by 10% due to better product mix and also sales price increases. For international market, the scooter ASP decreased by 25%. There are three key reasons. First, depreciation of U.S. dollar against RMB affected ASP by around 8%. Second, he change in the way distributors place orders. Many distributors chose to place separate orders for scooter body and the battery pack so as to save international shipping cost. As a result, battery pack sales were booked into the spare parts revenue instead of scooter revenue. This practice also happened in Q1 as we discussed the last earning call and expect to continue in future quarters. The impact from this market was around 14%. Third, change in product mix affect our international ASP by around 3%.

In summary, out of the 25% ASP decline, around 14% was caused by the way of separate ordering, around 8% was caused by the depreciation of the U.S. dollar, and the remaining 3% was from a change in the product mix. Compare with Q1, our ASP for international markets increased by 6% due to a change in product mix. The ASP of accessories spare parts and services was 512 per scooter, a 25% increase compared with Q2 last year. Out of the 25% increase, 9% was due to the change in the way of placing orders we just talked about. The remaining 16% was due to strong sales of battery packs to sharing operators.

Gross margin was 22.7%, 0.3 percentage points lower than this time last year, mainly due to three reasons, first, the higher percentage of sales from low margin models G0, F0 reduced our margin by around 1.3%. Second, higher spare parts sales to international market improved our margin by around 1.7%. Third, the higher raw material cost from commodity price increase reduced our margin by around 0.7%. The raw material cost increase continued into Q3, but the good news is since August some of the key component cost, for example, battery pack began to decline. We may still see some cost pressure in the third quarter, but from fourth quarter we expect the cost decline to benefit our margin.

Our total operating expense including share-based compensation were RMB125 million, increased by RMB43 million or 53% year-over-year. The increase was mainly caused by higher sales and marketing expense of RMB11 million for branding and advertisement, higher depreciation expense of RMB9 million for new store openings and RMB50 million for staff cost. As a percentage of revenues our operating expense excluding share-based compensation was 13.2%, 0.5% higher than Q2 last year, mainly due to higher depreciation from new store openings.

In the month of May, we received a total RMB41 million government grant, out of which RMB21 million was booked into income statement in the second quarter. The remaining will be booked in the following quarter. Our net income was RMB92 million, a 62% increase year-over-year. The adjusted net income was RMB104 million and adjusted net margin was 11%, 0.5% higher than the same period last year. We are pleased to deliver a profitable quarter with improved net margin.

Turning to our balance sheet and cash flow. We ended the quarter with RMB1.2 billion in cash term deposits and short-term investment. Our operating cash flow was positive RMB287 million, much higher than our net income. Our Q2 capital expenditure was around RMB83 million, mainly related to capacity expansion of RMB21 million and a new store building of RMB52 million. Now let’s turn to guidance. We expect third quarter revenues to be in the range of RMB1.25 billion to RMB1.45 billion, a increase of 40% to 62% year-over-year.

With that, let’s now open the call for any questions that you may have for us. Operator, please go ahead.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question is from the line of Vincent Yu of Needham and Company. Please go ahead. Your line is open.

Vincent Yu — Needham & Company — Analyst

Thanks management we’re taking my question. I have three questions. The first question is with offline retail store expanding at a fast pace, the scooter sales volume in China is somewhat soft in second quarter. Any reason behind this discrepancy that management can share some light on? My second question is in terms of international shipping, Netherlands already shared the impact from international shipment on ASP in second quarter sales results. Is there any other impact on our second sales results the management want to share? And will we continue to see such impact in the second half? My third question is about the guidance. So there is about RMB2,00 million difference between our guidance top and the bottom. So the spend for third quarter is not more. So what is factored in this difference? Is that something to do with the [Indecipherable] regulation or any other reason? Thanks.

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

Again, Vincent, thanks for the questions. So I think let me make sure I get the first question clear as saying with the fast store expansion from Q2 versus Q1, you are saying that the boom increase is in comparable with expansion, I didn’t fully get what your first questions is about?

Vincent Yu — Needham & Company — Analyst

Yeah, so, like softer than I think we expected because the offline retail store is expanding roughly like faster pace. So, are we seeing the stores need to be mature in likely longer time or shall we see these stores mature in the third quarter or anything that you can share on that front?

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

Yeah, I think, I think you hit the right point. I think typically when they opened the store you look at, it really depends on, even though we’re seeing versus with Q2 versus Q1, we had about 450 stores, but it actually depends on which month of the store are open. So usually with the new store opening would take it roughly about quarter or so to have the stores to get to sort of right operating pace. So I think that’s where you actually start seeing — we’ve mentioned that the Q2 stores, the end of Q2 stores, they are actually very strong basis for our Q3 growth, because as those stores opened in Q2, they start getting a bit traction, get into mature and sort of fully operation, that’s where the Q3 results will come in.

And on the second, international shipment. I mean, I think to be honest, yes, we do observe, we see a obstacle in two things. One is actually shortage of the international shipping containers and second is actually even being able to book the containers that per container cost used to be — used to be $6,000 and now is actually raised up as high as $18,000. So, it’s actually 3 times of what we observed in the past, and on per container basis, we used to be able to get roughly about 40 scooters per container. So that’s actually, you talk about it’s almost about $150 into shipping cost. Now instead of $150, it become a $450 per unit shipping cost. I think this is actually the issue we have observed for the past two quarters and those are the issues because some of our international orders we have a backlog of almost 4,000 units, we’re not able to ship in Q2 because of lack of container and because of this high shipping cost where our distributors, our importers in Europe and United States sort of are patching or betting, waiting for the shipping cost to decline a bit before to ship more. So this is part of the obstacle we’re facing right now. So I think the company is looking for. One, working with the distributors and to see whether there is a possible way for us and together work with them to subsidize some of the shipping cost increases. And second, whether this will be reflected in some other retail prices of our international product.

And the first question on the guidance. Why would you have a wider band for the guidance. There is fewer factors when we consider giving this guidance [Indecipherable] whether is the replacement demand will kick in already in September. Look, for example, in Beijing, the Beijing local government already announced since October-November the regulatory authority will start going on the street to check people’s scooter whether they are in compliance or not, whether we have replaced to the rider plates for their electric bicycles. So we expect to some of the customers we take the ultimate promotion in September, too early of replace their bicycles if that kicking quickly that we are able to meet the higher end of our guidance. So this is one of the biggest element in when we’re giving the guidance. On top of that, of course there is also quite a few other factors. One is the COVID-19, is that we see some rebound in China. Some of the street were closed because of the COVID. Looks like in the next one to two weeks, some of the streets, some of the places may has relaxed their policy, allow people to come to the shops again, but again there is some uncertainty about COVID. Also there is also uncertainty with the international shipping whether we get sufficient capacity to ship all the backlog orders within the third quarter. So there is few reasons behind why we are giving a quite wide range. This is answer to your third question, Vincent.

Vincent Yu — Needham & Company — Analyst

Got it. Very clear. Thank you very much.

Operator

Thank you. Our next question is from the line of Bin Wang of Credit Suisse. Please go ahead. Your line is open.

Bin Wang — Credit Suisse — Analyst

Thank you. I also got three. The first one is about about the July performance and first half August was a robust sales growth in terms of overall volume, that’s number one. Number two is about C0 margin. I noticed why it’s much more expensive compared to G0 and G5 and what’s the operating gross margin that we can anticipate for C0 because this maybe going to a new segment and very important driver for the future? And the last one is about the sector. The investor seems to be worried about sector dimming, although you have a very decent gross, but the sector seems to be flat in the second quarter. So, what’s the reason about flattish sector production, and what’s your forecast for the second half of the sector demand? Thank you.

Hardy Peng Zhang — Chief Financial Officer

So, I will comment first and then let Yan to add further comments. For your first question, I believe you are asking about how we see the sales volume momentum in August. So far in the first 15 days, the orders were very strong, very strong retail sales as well as the orders coming from our distributors because in August the [Indecipherable] already started and also the [Indecipherable] in China they’re gone. So we see no more people coming back to street again to buy new scooters. So in August, we do see very, very strong growth, not only from our orders, but also from the retail sales.

Your second question about our gross margin for the C0. The margin is around 15%, very similar to what we saw in C0 and F0. But with the ramping up of the production when we get more and more orders of the raw materials, we may see potential the margin may go up to 20%. But in the short term its still around 15% similar to other products.

Comments on the third question about the sector growth. What we saw is in April based on the information from MIT, the industry grew by around 29%. In May, the industry grew by almost flat almost flat. So combined, April and May, the industry grew by around 18%. We are still waiting for to June numbers coming out by the authority. But we do believe the industry continue to have a double-digit growth in the second quarter. As you can see we are growing our China sales volume by close to 60%.

For the second half of this year, we do believe the market will continue to grow, but it depends on which location and which geography we are. I think the, some of the Tier 1 Tier 2 cities, especially where the new regulation, the new standards was strictly enforced, we do believe the growth will continue very strong. For example, we talked about Beijing. Beijing will begin to check the scooter whether they are in compliance or not. In this case, we do believe many customers will begin to replace their scooters. It also apply to other cities where the new regulation is strictly enforced. But in the lower-tier cities where the new regulation was not strictly enforced, then because of the very high base last year the growth rate may not be as fast as what we saw last year. For new technologies, around 70% to 80% of our sales volume is coming from the top 30 cities. They’re many Tier 1, Tier 2 cities. So, we think we are a very good marketplace — geography, in terms of geography. Therefore, we do believe our sales will continue to grow very fast in the second half, so this is comment to your third question [Indecipherable]

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

I think Hardy covered pretty.

Bin Wang — Credit Suisse — Analyst

Can you quantify that in April very good, very convinced in the number. Thank you.

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

What was the question, you mean April numbers?

Bin Wang — Credit Suisse — Analyst

August. It’s just mentioned August was very good. So can you provide some quantifying that very good in August?

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

Yeah, in August we are looking to double our sales volume In August we’re double in ours sales compared with August last year. The part of the reason is because some of the orders were not able to ship out in July because of the flooding. Also because the hurricane in Shanghai. But even after that we see very, very strong orders coming in August.

Bin Wang — Credit Suisse — Analyst

Okay, great. Thank you so much. Great.

Operator

Thank you. Our next question is from the line of Winnie Dong of Piper Sandler. Please go ahead. Your line is open.

Winnie Dong — Piper Sandler — Analyst

Hi, thank you in advance for taking my question. I was wondering if you can comment on the gross margin trajectory I know Hardy put a few puts and takes in the quarter. Do you see a way to push this metric back to the mid-20s? That’s my first question. And then my second question is on the international markets. I think in previous times or during earnings calls you guys have mentioned Southeast Asia as a key market. Can you please provide an update there? Is that still the case? What kind of momentums are you guys striving right now? Thanks.

Hardy Peng Zhang — Chief Financial Officer

Yeah. I think let me first comment on the gross margin. I think in Q4, lets put this way, in Q4 we do believe we have a high chance to get our margin back to middle 20’s, but in Q3 we’ll continue to see some of the cost of price share. First of all, our business has a similarity. If you look at the Q3 margin, each year Q3 margin is always the lowest compared with Q2. If you look at the year 2019, 2020 numbers, the Q3 gross margin is around 2% below Q2 margin. So, they take a Q2 with 22.7% then we minus 2% then it’s 20.7% And also because some of the procurement cost for raw materials is still very high in May, June, and also July. So, we will still have some burden in the third quarter to absorb all the inventories to continue since August, some of the raw material cost began to decline, especially the battery cost, some of the battery costs we buy, their costs already down by more than 10% compared with the peak, the peak time. Therefore that’s why I think in Q3 we see some continued pressure mainly because of the inventory we bought earlier. But in Q4, if this trend continues, we do believe we have a good chance to get back to mid-20s in terms of gross margin. For the international market, also on the Southeast Asia market I’ll let Yan to comment on.

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

I think, so as we talked in the previous call, basically, I think if you look at the first couple of quarters in this year, I think in the main focus is still on the European and the US markets, and those probably still represent a huge majority sales of our international markets. On the Southeast Asian market, we’ll continue to explore different options into the Southeast Asian market. We start to open about for or five stores in Jakarta this year. And those actually — and also, we start to grow-up two products, that’s our M1, also our G3 products for the Southeast Asian market this year. So far, the sales has been relative soft because the two products right now, still — even the G3 products is still priced somewhere around $1,500, which is slightly more than what we hoped for under that market.

So, I think there’s two things we’re looking at. One is the continued decline of the lithium batteries, especially RFT batteries costs that help us to really to drive the retail price down of the G3 product to somewhere around $1,300 to $1400. I think that’s where we’re going to see a tipping point among that market. So, I think we’re looking at probably — not in the Q4 this year, will be some time mid next year where we actually able to see such a cost decline and able to pick up that sort of other sales in that market.

Winnie Dong — Piper Sandler — Analyst

Great. Thank you so much.

Operator

Thank you. Next question is from the line of Jing Chang of CICC. Please go ahead. Your line is open.

Jing Chang — CICC — Analyst

Thank you for taking my question. So I have another three questions. The first, I think that we can still see the year-on-year decline on the U series and N series sales and the Gova series has been on the market for more than one year. So previous we made forecast that in the future the high-end market space or penetration rate was spread off above RMB35,000, really can can get to 15% to 20% in a tough market on the term so heavy, adjusted our forecast of the high-end market space. This is my first question.

And second is that recently I think that with the launch of many new products by our peer brands and also the expansion of our own stocks, do we feel more compensation mainly reflected on the single-store sales. Can we still see some growth on the single-store sales? And also last year since [Indecipherable] last year, we began to open more stores quickly at higher speed. So how are the operating cost parity of the new stores compared with the old stores.

My last question is for our new kick scooters product, also has been sold in the European mark to market. So what is our future positioning of this new product business. Can we expect the sales to maybe reach 1 million in maybe two to three years and to become a major driver of our sales?

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

I’ll try to cover the question one and four and then I’ll have Hardy to come in on a per store sales part and then I’ll comment on that one. So first of all I think my understanding is the question about the focus on the high-end market. I think if you look at the first first half of the yea, yes, if you look at most of our product rollout for the first half year, the two Qs are around the Gova series, basically the S-series, the C-series, the upgraded G3. That doesn’t mean that the company changed the focus there. Hey, we’ve started — and product not neglecting the high-end products. It’s really just how the product — the new product being time timeframe. So and to us, basically we view as our basically the most high end product, into my electric bicycle product. That product just rolled out in mid July and actually started to receiving quite a bit orders from the top-tier cities. So it’s the upgrade of our M2 product last year.

And then in Q4 this year, we actually also going to have a couple of really high-end motorcycle product rollout out for the China market as well as for the international market. So it just happened to in the first half of the year, we actually had more products that being sort of front-loaded in the first half of the year. So starting second half year and also 2022 — early 2022, you’re going to expect, you actually — will actually have more high-end product with the electric bicycle as well as the electric motorcycle markets. So this is really just the product rollout timing issue.

On the fourth one, I think absolutely yes. So if we look at our initial kick scooter, I think the question is about kick scooters and the future expectation on kick scooters I think it depends on what you look at the market report. So I think the kick scooter — the sales volume for the kick scooter global is anywhere between 5 million units to 7 million units, depends on where it would factor in the kick ones are not the kick ones. So I do think that it’s possible for us in the next few years to get to the 1 million units for the kick scooters. If you look at our first KQi3, that’s the kick scooter that we did we do a launch our Indiegogo, its basically a crowd funding website and and we quickly able to get more than 2000 units orders. And keep in mind that those — the people who orders those kick scooters they didn’t even see the product, the real product, they only saw the picture of it. And also the the orders won’t be delivered to them until literally, until starting August or September where they’re actually putting money in July and August, right? So they’ll wait for a couple of months for the product come in.

So with those things and we are still managed to actually to get more than 2000 orders. So it actually demonstrate our strong capability in the product design as well as the kick scooter is gaining attraction from our global users. And obviously, its having a single product line for that kick scooter wouldn’t get us to 1 million units. So I think in our product pipeline we actually have about two or three more product lines, the product years [Phonetic] in that kick scooter anywhere between from a cheaper product to a more expensive product to provide a wider range of kick scooter product that will allow us to get to the 1 million units. I think that sort of near future target that we’re setting ourselves up.

Now I’ll have Hardy to talk about little bit on the same-store sales and the stores.

Hardy Peng Zhang — Chief Financial Officer

Yeah, for the same-store sales, definitely I think. One, the company opens stores faster, which we’ll see the same-store sales teams declining, but we believe the store growth is a leading duty ticker beauty take. So really need to think about these kind of investments the company put today. In the future you’re going to see it helping to lead to higher volume growth. I can give you a few examples, few numbers. For example if you look at the Q2 2019. In Q2 2019, we opened only around 130 stores and in Q2 this year we opened around 450 stores. But as you cut with the same-store sales, the other thing, so I don’t, we didn’t really see that the faster growth of our stores may make our same-store less competitive compared with what we for the business for. So this is the one number you can use that as a reference.

Secondly, as I mentioned, including new stores, they always have had for the store to mature. Therefore, it’s kind of leading cater to what to think about what the the sales volume are going to have in six months time, in 12 months time. Therefore, we need to prepare for that to open more more stores. I year 2018, back in 2018, because we are very busy with listing in the U.S., we opened only around 300 stores in 2018. Because of the store opening stores in 2018 kind of did not support our spot to growth in 2019. So this is another example you can think about.

Short-term, faster opening stores will in some way make our same-store sales look that very good. But we do believe that is a very important investment we need to do if we are looking for long-term growth for our company. So this is one where if you look at the numbers. Secondly, the store is also very important to resolve this. The location is very important for only sales and the customers. We also take this opportunity in China to grab some of the very best location, therefore can position ourselves if its a very good growth perspective in the future. Today, some of other competitors, they also released their second quarter results. If you compare to ours out with their results, you do see the difference. I think because we are willing to invest in the retail network expansion, that’s because we have more confidence to grow our sales volume in the next few quarters. So this is the comments to your question on the same-store sales.

Jing Chang — CICC — Analyst

Okay, got it. Thank you for your answers.

Operator

Thank you. [Operator Instructions] There are no further questions. I’d now like to hand the conference back to the presenters. Please continue.

Yan Li — Chairman of Board of Directors, Chief Executive Officer, Chief Operating Officer

All right. Thank you, operator, and thank you all for participating in today’s call, for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you.

Operator

[Operator Closing Remarks]