Guosen: Policy strength combined with optimization of the overall situation, the turning point of the high prosperity of the bicycle industry is approaching.

Guosen released a research report stating that, based on sales calculations and excluding policy impacts, the industry is expected to maintain a compound sales growth rate of 5%-10% in the future, with demand for replacing two-wheeled vehicles being the core contributor. Assuming the range of clearance proportions under the new national standard is 20%-45%, corresponding to a clearance sales range of 1.65-3.71 million units, and assuming that the replacement ratio for old vehicles with new ones boosts sales by 5%-30%, corresponding to a sales boost range of 0.96-5.76 million units. Taking into account the policy background, the industry's overall sales growth rate is expected to increase to 16%-30% by 2025 (depending on the level of enforcement), and policies are expected to promote the industry to reach a turning point in sales, with leading companies seeing an increase in sales and market share. Guosen's main points are as follows: 2019 new national standard: Extension of transition period implementation in some core provinces When the new national standard was first introduced in 2019 to promote the replacement of non-standard vehicles, the most significant boost to industry sales was seen. As the transition period expired, some core provinces for electric two-wheeled vehicles such as Henan and Jiangsu extended the transition period, and Shandong province proposed not to ban oversize vehicles after the transition period, leading to a weakening of overall replacement efforts later on. Additionally, the industry saw behaviors such as removing speed limiters and illegally installing high-power batteries, and oversize vehicles still exist in the industry. New national standard + replacement of old vehicles with new ones, the industry is expected to reach a turning point in sales The 2024 Nanjing "2.23" fire highlighted industry standardization issues, with the revised new national standard, whitelist, and the policy of replacing old vehicles with new ones successively introduced. The new national standard is expected to impose higher requirements on companies from the production end, reducing the likelihood of violations by small enterprises and promoting market concentration towards leading companies. The subsidy for replacing old vehicles with new ones is significant and is expected to provide consumers with a noticeable incentive, increasing demand. Based on sales calculations and excluding policy impacts, it is expected that the industry will maintain a compound sales growth rate of 5%-10% in the future, with demand for replacing two-wheeled vehicles being the core contributor. Assuming the range of clearance proportions under the new national standard is 20%-45%, corresponding to a clearance sales range of 1.65-3.71 million units, and assuming that the replacement ratio for old vehicles with new ones boosts sales by 5%-30%, corresponding to a sales boost range of 0.96-5.76 million units. Taking into account the policy background, the industry's overall sales growth rate is expected to increase to 16%-30% by 2025 (depending on the level of enforcement), and policies are expected to promote the industry to reach a turning point in sales, with leading companies seeing an increase in sales and market share. Optimized structure, single car income and profitability expected to improve Reviewing the industry's competitive landscape, Aima achieved an increase in sales around 2010 by relying on product design and brand effects. Yadi gradually gained recognition for its product quality, forming a duopoly. In 2019, Yadi took advantage of the new national standard first and opened up stores vigorously after going public, narrowing the sales gap with Aima, and squeezing the market share of small and medium-sized enterprises. Referring to the household appliance industry, the period from 2000 to 2010 saw a rapid increase in market concentration due to price wars. Subsequent scale effects and a decrease in price wars brought about overall profit improvements. It is expected that after the new national standard prompts the exit of small and medium-sized enterprises, the industry's profitability is expected to improve; the new national standard requires the addition of Beidou chips to products, shifting electric two-wheeled vehicles from light intelligence to high intelligence, prompting car companies to explore more profit models and potentially giving rise to new profit points. Transformation of the electric two-wheeled vehicle industry, the industrial chain will welcome new growth With the improvement in the prosperity of the electric two-wheeled vehicle industry, the core supply chain segments are expected to benefit, including batteries, chips, and motors. The battery segment is expected to benefit as the old-for-new subsidy gives more incentives for lithium battery-electric vehicles to switch to lead-acid ones, benefiting leading lead-acid battery companies. Adding Beidou chips is expected to bring tens of billions of incremental space to the chip segment. Leading companies in the motor industry are also expected to benefit from an increase in sales. Investment recommendation: The revision of the new national standard and the replacement of old vehicles with new ones are bringing about a transformation in the electric two-wheeled vehicle industry, optimizing the structure. Participants in the industry are expected to usher in a new era of growth with both volume and price rising in sync. Related companies in the industry chain include leading companies in the electric two-wheeled vehicle industry, such as YADEA (01585), Aima Technology Group (603529.SH), and Ninebot Limited (689009.SH), which perform well in the high-end market. Risk warning: Policy implementation may be slower than expected, industry price wars, weakened consumer purchasing power, new car releases and sales falling short of expectations, and excessive inventory levels.