小牛電動 (NIU) 2021 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Niu Technologies Second Quarter 2020 Earnings Release Conference Call. (Operator Instructions) And please be advised that today's conference is being recorded. (Operator Instructions)

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

Thank you, operator. Hello, everyone. Welcome to today's conference call to discuss Niu Technologies' results for the second quarter of 2021. The Niu's press release, corporate presentation and financial spreadsheets have been posted on Niu's Investor Relations website. This call is being webcast from the company's IR website, and a 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 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 forward-looking statements except as required by law.

Our earnings press release on this call include discussions of certain non-GAAP financial measures. The press release contains a definition of non-GAAP financial measures and the reconciliation of GAAP to non-GAAP financial results. On the call with me today are our CEO, Dr. Yan Li; and the CFO, Mr. Hardy Zhang. Now let me turn the call over to Yan.

Thanks, Jason, and thanks, everyone, for joining us on the call today. So in the second quarter, we 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 the 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 the international market reached nearly 7,000 units, a 35% increase year-over-year.

We are attributing our Q2 growth to the 3T strategic executions: Our targeted retail expansion, the release of new products that appeal 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 a total of 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 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're 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 MQi2s. We begin the sales of our M2S just a few weeks ago in late July. The new M2S is the upgrade of M2, the flagship product and the new China national standard for electric bicycles.

The M2S is equipped with our latest smart IoT technologies, a color display with navigation that mirror your mobile phone and the OkGo! system with distance sensing and keyless ignition, and also our latest battery management system, NIU Energy 7.0, which increased the drive range.

We launched the M2S with a starting price of RMB 5,600 up to RMB 8,000. The market response has been great, especially in the top-tier cities where the M2S is viewed as the most high-end electric bicycle product in the market.

Now shifting our discussion to our huge popular Gova Series. The all-new Gova F and the Gova C Series have allowed us to expand our offerings for the mid-tier product categories and helps 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 our new eagle eye headlights, which has been a hit with our new targeted demographics. As we mentioned in our last earnings call, the Gova F0 set the JD.com presales record for urban mobility products 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 been a very popular product. Despite being launched in late May, the F2 accounts for 6% of our total sales volume in Q2. And we're also about to launch the Gova F4 electric motorcycle product in the next few days priced from RMB 4,500 to RMB 6,700.

Now one of the other products coming out of the April global launch was the Gova C0. The C0 was especially designed for female customers with multiple macaron dessert-flavored color choices and a 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 with our Sky Eye hardware, allowing the C0 to be connected to our new app just like our new M-Series vehicles.

The C0 has 2 versions differentiated primarily by the riding range of 50-kilometer standard range and 70-kilometer extended range options, affordably priced at RMB 3,400 and at RMB 3,800.

We also upgrade our Gova G3 vehicle in order to better meet the riding habit of users in China second- and third-tier markets. The all-new G3 has been seeing a significant upgrade to performance, thanks to the update we made on the hot motor, the controllers as well as the low-resistant tyres. The G3 now can get a 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, that all-new G3 sales has quickly climbed to 16% of our total volume. The G3 is priced at RMB 3,700 to RMB 4,000. We're also quite excited about our KQi3 kick scooters that we announced back in April.

Just a few weeks ago, on July 13, we launched our European and United States presales for KQi3 on Indiegogo or 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 rate and more color options. The KQi3 campaign on Indiegogo was fully funded in under 5 minutes and has raised over $1 million plus in sales in a little over 3 weeks with the support of more than 1,800 bikers.

As of today, the presales volume for KQi3 has exceeded 2,000 units plus and the delivery will start in Q3. Additionally, the wholesale orders for the end of 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 event alone garnered more than 1,000 publications across hundreds of domestic international media outlets, firmly establishing our position as a global market leader in urban mobility.

Beyond traditional media, our team continued to accelerate our growth and engagement on social media platforms. In the second quarter, the Douyin and Kuaishou channels has attracted more than 34 million views, an increase of over 400% year-over-year. We believe capitalizing on those channels not only broaden our exposures, but more importantly, it's being paid off in sales.

Now I also want to share some very exciting news. We are very proud to announce that new scooter and moped are responsible for powering 10 billion kilometers of traveling globally. In just a few short weeks, we'll cross the 10-billion-kilometer threshold, and we believe it is an important moment, not just for Niu, but for the entire 2-wheeled and the micro mobility industry. This will be the first 10 billion kilometer ever recorded in the 2-wheeler industry history.

The 10-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 that are pushing the boundaries on how and why they ride a Niu. The milestone shows the aspiration of our Niu fans join us to redefine urban mobility and make life better. It represents the strength and vitality of our brand, and when people think about urban mobility, they will first think of Niu.

Now to celebrate the 10-billion-kilometer milestone with our Niu fans, we launched a variety of brand campaigns partnering with China influencers and tapping to targeted TV ads to promote the new lifestyle. These were all coupled with the release of our all-new limited-edition MQi 10-billion-kilometer scooter, paying homage to the original M1 that launched the brand in 2015. These activities are perfectly timed to amplify our brand messaging during the peak sales season of 2021 in China.

Now 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 hot sale season. We have also ramped up our production capacity I recently brought 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 come in just in time for our back-to-school promotions running from August to September this year.

Now with the launch of new products, expansion of our sales channel, coupled with the assortment of peak season promotions, we are very excited about the weeks ahead in the China market. Now for the international market, we are very excited with our successful launch of our KQi 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 a much higher shipping cost, which prevented us from supply sufficient inventories for the retail sales in an international market.

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

Thank you, Yan, and hello, everyone. Our press release contains all the figures and comparisons you need. We have also uploaded Excel format figures to our IR website for the reference. As I review our financial performance, we are referring to the second quarter figures, unless I say otherwise. And that all monetary figure is RMB, unless otherwise noted.

Our Q2 sales volume reached to 253,000 units, representing a 58% year-over-year growth. China sales volume increased by 59%, mainly driven by new product launch. The 2 new models, F0 and F2, started delivery in the second quarter. They contributed to 30% of our total sales volume and are the key drivers for the second quarter sales volume growth. International sales volume increased by 35%, slightly below our expectation. There are continued challenges from COVID-19 and international shipping, both affected our sales and delivery to the international markets.

With regards to product mix, 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% from Gova Series, 30% was from the low-priced models, G0 and F0. Remaining 26% was from other Gova 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-priced models G0, F0 reduced from 38% in Q1 to 30% in Q2. The improved product mix also led to a higher ASP this quarter compared with Q1.

Total revenues increased by 47% to RMB 945 million within the guidance we provided earlier. The quality of revenues improved this quarter with better product mix. Besides improved e-scooter product mix mentioned above, we also generated RMB 130 million revenues from accessories, spare parts and services, representing a 98% year-over-year growth and accounting for 14% of our total revenues. The strong sales mainly came in from battery pack sales to share more features in the European market.

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 about 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 markets, the scooter ASP decreased by 25%. There are 3 key reasons: First, depreciation of U.S. dollar against RMB affected ASP by around 8%; second, the change in the way distributors place orders. Many distributors choose to place separate orders for scooter body and battery pack so as to save international shipping costs. As a result, battery pack sales were booked in the spare parts revenue instead of scooter revenue. This practice also happened in Q1 as we discussed in last earnings call and expect to continue in future quarters. The impact from this practice 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 depreciation of U.S. dollar and the remaining 3% from change in product mix. Compared with Q1, our ASP for international market increased by 6% due to change in product mix. The ASP of accessories, spare part and services was RMB 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 3 reasons: First, the higher percentage of sales from low-margin models, G0, F0, reduced our margin by around 1.3%. Second, higher spare part sales to international markets 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 costs, 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 will benefit our margin.

Our total operating expense, excluding share-based compensation, were RMB 125 million, increased by RMB 43 million, or 53% year-over-year. The increase was mainly caused by higher sales and marketing expense of RMB 11 million for branding and advertisement, higher depreciation expense of RMB 9 million for new store openings and RMB 15 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 RMB 41 million government grants, out of which RMB 21 million was booked into income statement in the second quarter. The remaining will be booked in the following quarters.

Our net income was RMB 92 million, a 62% increase year-over-year. The adjusted net income was RMB 104 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 RMB 1.2 billion in cash, term deposits and short-term investments. Our operating cash flow was positive RMB 287 million, much higher than our net income. Our Q2 cash expenditure was around RMB 83 million, mainly related to capacity expansion of RMB 21 million and a new store buildings of RMB 52 million.

Now let's turn to guidance. We expect third quarter revenues to be in the range of RMB 1.25 billion to RMB 1.45 billion, an 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.

(Operator Instructions) First question is from the line of Vincent Yu of Needham & Company.

I have 3 questions. The first question is with off-line retail stores 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 shed some light on?

My second question is in terms of international shipment. Management already shared the impact from international shipping 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 RMB 200 million difference between our guidance top and the bottom. So the band for third quarter is not more. So what is factoring this difference? Is that something to do with the data scrutiny regulation or any other reason?

So again, Vincent, thanks for the question. So I think let me make sure I get the first question clear as saying, with the fast store expansion on Q2 versus Q1, you're seeing that the volume increase is in comparable with the expansion? So I didn't get -- fully get your first question is about.

Yes. So like softer than I think we expected because the off-line retail store is spending a relatively like faster pace. So are we seeing like the stores need to be mature in a roughly longer time? Or like do we -- should we see like of these stores mature in the -- in the third quarter? Or like is there anything that we can share on that front?

Yes. I think you hit the right point. I think typically, when they opened the store because you look at it really depends on -- even though we're saying versus with Q1 -- Q2 versus Q1, we added about 450 stores, but it actually depends on which month of the store are open. So usually, with the new store opening, it would take roughly about a quarter or so to have those stores to get to sort of a right operating pace.

So I think that's where you actually start to see -- as we mentioned that the Q2 stores, the end of Q2 stores they are actually a very strong basis for our Q3 growth because as those stores open in Q2, they start to getting a bit of traction, get into mature and sort of the fully operation, that's where the Q3 results will come in.

And on the second, on international shipments. I mean I think, to be honest, yes, we do observe a -- right now, we see an up stack in 2 things. One is actually shortage of the international shipping containers. And second is actually even when you're able to book the containers, the per container cost used to be $6,000 and now it's actually raised up as high as $18,000. So it's actually 3x 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 talk about, it's almost about $150 into our shipping cost. Now instead of $150, it becomes $450 per unit shipping cost. I think this is actually the issue we have observed for the past 2 quarters. And we're -- and those are 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 costs where our distributors or importers in Europe and United States, sort of patching or betting -- waiting for the shipping cost to decline a bit before they ship more. So this is part of the up stack that 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 terms of the retail prices of our international product.

Yes. And for your third question on the guidance, while that you have quite wide -- and for the guidance, there's a few actions when we consider giving this guidance. The biggest one who brings some kind of uncertainty is all upside, an upside is whether the replacement demand will kick in already in September.

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're in compliance or not, whether they have replaced to the right plate for their electric bicycles.

So we expect some of the customers we take the autumn promotion in September, too early to replace their bicycles. If that kick in quickly, then 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 COVID-19 is that we see some rebound in China. Some of the streets were closed because of the COVID. Looks like in the next 1 to 2 weeks, some of the streets, some of the places may have relaxed their policy, allow people to come to the shops again. But again, there's some uncertainty about COVID.

Also there's also uncertainty with the international shipping, whether we get sufficient capacity to ship all the backlog orders within the third quarter. So there's a few reasons behind why we are giving quite a wide range. So this is the answer to your third question, Vincent.

Our next question is from the line of Bin Wang of Credit Suisse.

I'll ask 3 ones. The first one is about July performance and first half August. What's the rough sales growth in terms of volume? That's number one.

Number two is about the C0 margin. I noticed that this one is much more expensive compared to G0 and G5? And what's the gross margin we can anticipate for C0 because this may be going to a new segment, a very important driver for the future?

And the last one is about the sector. Investors seem to be worried about the sector demand all in all, and you have a very decent growth, but the sectors used 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?

So I'll view your comments first, and let Yan to add further comments. For your first question, I believe you're asking about how we see the sales volume momentum in August. So far in the first 15 days, we were very strong retail sales as well as orders coming from our distributors. Because in August, the peak season already started and also the flooding in China, they are gone. So we see more and more people coming back to street. They are beginning 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 is about our gross margin for the C0. The margin is around 15%, very similar to what we saw in G0 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, C0 is 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 IT, 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 June numbers coming out by the authority. But we do believe the industry continued 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 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 talk about Beijing. Beijing will begin to check the scooter, whether they're in compliance or not. In this case, we do believe many customers will begin to replace their scooters, is also applied 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 coming from the top 30 cities in Tier 1, Tier 2 cities. So we think we are in a very good market geography -- in terms of geographies. Therefore, we do believe our sales will continue to grow very fast in the second half. So this is a comment to your third question.

I'll let Yan to see whether any ideas to see what...

I think Hardy covers pretty well on this.

Can you quantify the April very good, very convincing numbers?

What's the question? You mean April numbers?

No. August, it was mentioned, August is very good, right? So can you provide some -- quantify the very good in August?

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

Our next question is from the line of Winnie Dong of Piper Sandler.

I was wondering if you can comment on the gross margin trajectory. Hardy, products and 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 the previous times or during the earnings call 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 momentum are you guys driving right now?

Yes. I think let me first comment on the gross margin. I think in Q4 -- let's say this way, in Q4, we do believe we have a high chance to get our margin back to mid-20s. But in Q3, we will continue to see some of the cost pressure. First of all, our business has a seasonality. 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 if we take this year Q2 as 22.7%, then we minus 2%, then it's 20.7%. And also, because some of the procurement costs for raw materials is still very high in May, June and also July. So we will still take -- have some burdens in the third quarter to absorb all the inventories.

The good news is since August, some of the raw material costs began to decline, especially the battery cost. Some of the battery costs that we buy, their costs are 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. But the international market also on the subsidation market, I'll let Yan to comment on.

Yes, I think -- so as we've talked in the previous calls, basically, I think, if you look at the first couple of quarters even this year, I think the main focus still on the European and the United States markets. And those probably still represent a huge majority sales of our international markets.

On the Southeast Asia market, we continue to explore different options into our Southeast Asia market. We start to open about 4 or 5 stores in Jakarta this year. And those actually drive -- and also we start to roll out 2 products, so our M1 and also our G3 product for the Southeast Asian market this year.

So, so far, I mean, the sales has been relatively soft because the 2 products right now still, even the cheapest G3 product steel priced somewhere at around $1,500, which is slightly more than what we hope for under that market. So I think there's 2 things we're looking at, one is the continued decline of the lithium batteries, especially the LFP batteries cost that help us to really to drive the retail price down of the G3 product to somewhere around $1,300 to $1,400. I think that's where we're going to see a tipping point toward that market.

So I think we're looking at probably not in the Q4 this year, will be sometime mid-next year where we're actually able to see such a cost decline and able to pick up that sort of sales in that market.

Next question is from the line of Jing Chang of CICC.

So I have another 3 questions. The first I think that we can still see the year-on-year decline on the U-Series and M-Series cells. And the Gova Series has been on the market for more than 1 year. So previously, we remain focused in the future the high-end market space or penetration rate with price of above RMB 35,000, maybe can get to 15% to 20% in the total market in the longer term. So have we adjusted our focus of the high-end market space? This is my first question.

And second is that recently, I think that with the long term any new products by our peer brands and also the expansion of our many stores we feel more competition mainly reflected on the single store sales? Or can we still see some growth on the single store sale? And also last year, since the first quarter last year, we began to open more stores quickly at a higher speed. So how are the operating profitability 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 and mark-to-market in dry. So what is our future positioning of this new product business? Can we expect the sales to maybe reach 1 million in maybe 2 to 3 years, and to become a major driver of ourselves? Yes.

Okay. I'll try to cover the question 1 and 4, and then I'll have Hardy to comment on the per-store sales part, and I'll comment a bit on that one.

So first one, I think, my understanding is the question about the focus on the high-end market. I think if you look at the first half of the year, yes, because you look at most of our product rollout for the first half of the year, first 2 Qs are around the Gova Series, basically the F-Series, the C-Series, the upgraded G-Series. So that doesn't mean that the company changed the focus, say, hey, we started doing mid-end product, not neglecting the high-end product.

It's really just how the product roll a top product, the new product rollout has been time framed. So the M2S basically we view as our basically the most high-end product in terms of electric bicycle product, that product just rolled out in mid-July and actually start receiving quite a bit of orders from the top-tier cities. So it's an upgrade of our M2 product last year.

And then in Q4 this year, we're actually also going to have a couple of really high-end motorcycle product rolled 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 have more mid-end products that being sort of front-loaded in the first half of the year. So starting second half of the year and also 2022, early 2022, you're going to expect -- you actually will actually have more high-end product roll out for the electric bicycle as well as the electric motorcycle markets. So this is really just a part of roll out timing issue.

On the fourth one, I think, absolutely, yes. So if you 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 it's anywhere the kicker -- the sales volume for the kick scooter globally is anywhere between 5 million units to 7 million units. It depends on where we do factor in the kids ones or not the kids ones.

So we're -- 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 a kick scooter that we did a launch on Indiegogo. It's basically a crowd funding website, and we're quickly able to get more than 2,000 units orders. And keep in mind that those -- the people who order those kick scooters, they didn't even see the product, the real product. They only saw the picture of it and also the orders not -- won't be delivered to them until -- literally until starting August or September.

So where they actually ship -- putting money in July and August, right? So they had to wait for a couple of months for the product to come in. So with those things, then we've still managed to actually get more than 2,000 orders. So it actually demonstrated our strong capability in the product design as well as the kick scooter is gaining a traction from our global users. And obviously, it's having a single product line for that kick scooter, it wouldn't get us to 1 million units.

So I think in our product pipeline, we actually have about 2 or 3 more product lines or product tiers 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's sort of a near-future target that we're setting ourselves up.

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

Yes. For the same-store sales, definitely, I think, one, the company opens a store very fast, we see the same-store sales seems declining, but we believe the store growth is a leading indicator. So you really need to think about this kind of investments the company put today. In the future, you're going to see it have a company to at least to higher volume growth.

I can give you a few example, a few numbers. For example, if you look at Q2 2019. In Q2 2019, we opened only around 130 stores. And in Q2 this year, we opened around 450 stores. But if you cover the same-store sales, they are the same.

So we didn't really see the faster growth of our stores may make our same-store sales less competitive compared with which we deliver this quarter. So this is the one number you can use as a reference. Secondly, as I mentioned, building new stores, they always have time for the store to mature. Therefore, there is kind of leading indicator of what to think about what's the sales volume we are going to have in 6 months' time, in 12 months' time, therefore, we need to prepare for that for more and more stores.

In year 2018, back in 2018, because we are very busy with the listing in the U.S., we opened only around 300 stores in 2018. Because of the slow opening of stores in 2018, kind of did not support our fast growth in 2019. So that's another example you can think about. In short-term, fast opening stores will, in some way, make our same-store sales look not 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 way we can go in the numbers.

Secondly, the store is also very important resources. The location is very important for when we sell to end customers. We also take this opportunity in China to grab some of the very faster locations. Therefore, can position ourselves as a very good growth perspective in the future.

Later today, some of other competitors they also released their second quarter results. If you compared our results with their results, it's totally different, 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 comment to you partially on the same-store sales.

(Operator Instructions) There are no further questions. I'd now like to hand the conference back to the presenters. Please, continue.

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.

Thank you. And this concludes today's conference call. Thank you for participating. You may now all disconnect.