Why did revenue rise while profit fell in the third quarter?

  • In the third quarter of 2026, Ninebot reported revenue of 7.585 billion yuan and net profit of 343 million yuan, up 14% and down 37% year on year, respectively. Revenue was 3% below Goldman Sachs’ prior forecast, and net profit was 36% below it.
  • Goldman Sachs attributed the margin shortfall mainly to cyclical factors including higher costs, and expects exchange-rate volatility and cost pressures to ease in 2027 after management takes action.
  • The year-on-year declines in electric two-wheeler prices and gross margins were also associated with a product mix shift toward more electric motorcycles and mid-range products. Management said both measures improved in the third quarter from the second quarter and expects that improvement to continue into the fourth quarter and next year.

How has the competitiveness of the two growth businesses changed?

  • Goldman Sachs believes domestic electric two-wheeler growth continues to outpace the industry, market share is rising and average selling prices are gradually stabilizing. Management slightly lowered its 2026 guidance based on shipments in the first nine months, but said inventory was healthy and retail sales in October exceeded expectations.
  • Management said robotic lawnmowers grew approximately 100% year on year in the third quarter, and expects full-year sales volume to remain industry-leading and inventory to be healthy. Goldman Sachs’ app download data shows that Ninebot continues to gain share in Europe with competitive products.
  • Management said the gross margin on robotic lawnmowers improved quarter on quarter, as a higher share of premium products offset some raw-material and marketing pressures. To address potential anti-dumping tariffs, however, the company plans to shift most overseas shipments to Southeast Asia, with initial costs expected to rise by approximately 10%. Whether it can pass those costs on through price increases depends on the intensity of competition.

Why do revenue and profit recover on different timelines?

  • Goldman Sachs expects year-on-year revenue growth to accelerate again in the fourth quarter: electric two-wheeler revenue will rise approximately 100% year on year, helped by a low comparison base; robotic lawnmower revenue will still grow approximately 50% despite entering the seasonal low period.
  • Goldman Sachs expects gross margins in both businesses to improve further quarter on quarter in the fourth quarter, but higher costs and persistently high R&D spending will continue to weigh on the operating margin year on year.
  • Goldman Sachs expects a more pronounced profit recovery to begin in the first quarter of 2027: robotic lawnmowers will re-enter their peak season, new products will contribute more and the product mix will improve. Together with adjustments to the cost structure and a lower comparison base, these factors will help profit recover.

How has Goldman Sachs adjusted its earnings forecasts and valuation?

  • After incorporating the latest results, Goldman Sachs cut its 2026–2028 earnings-per-share forecasts by 13%–23% and lowered its 12-month price target from 58 yuan to 50 yuan, while maintaining its Buy rating. The target is based on a price-to-earnings multiple of 15 times forecast 2028 earnings per share, discounted back to 2027 at a cost of equity of 9.5%.
  • The company also proposed increasing its share buyback plan from 150 million–300 million yuan to 300 million–700 million yuan, with the repurchased shares to be cancelled. Goldman Sachs estimates that the 3.3% dividend yield combined with the proposed buyback implies a potential total shareholder yield of 4.4%–5.9%.