GF Securities: The core competitive factor of the bicycle industry has shifted to "product upgrades", we recommend leading companies such as Aima Technology Group (603529.SH).

GF SEC released a research report stating that the core competitive factors in the two-wheeler industry have shifted from "price competition" to "product upgrades", and the competitive situation has shifted from "full industry competition" to "concentration of leading players". Currently, the stock prices of leading two-wheeler companies such as Yadea, Aima, and Jiuhao have significantly retraced from their 25-year highs, as the market has fully anticipated the pressure on industry demand due to the switch to the new national standard. The competitive advantage formed by Yadea, Aima, and Jiuhao is not fully reflected in their valuation, and this requires continuous market share growth and stable performance growth to catalyze valuation increases. GF SEC recommends investing in Yadea (01585), Jiuhao Company WD (689009.SH), and Aima Technology Group (603529.SH). GF SEC's main points are as follows: Industry development in four stages, policy sets the pace Having gone through the starting phase in the 1990s, the high-speed growth period from 2001 to 2014 (driven by the ban on motorcycles, with a CAGR of 36.7%), the bottleneck period from 2014 to 2019 (CAGR of 1.4%), and the second growth phase after 2019 (driven by the new national standard leading to replacement of existing stock, with annual sales stable at 50 million units), significant sales increase in the second year after policy issuance. New national standard reshapes competition landscape (1) After 2019, compliance squeezes out long-tail enterprises and market concentration increases. By 2025, the top six companies such as Yadea, Aima, Tailing, and Jiuhao account for 71.7% of shipments, with replacement demand dominating the market (accounting for over 50%). (2) Leading companies in the industry such as Yadea, Aima, and Jiuhao have higher ROE than second-tier companies, with the source of excess ROE being higher net profit margins and asset turnover levels, due to their manufacturing scale and channel efficiency. Change in industry competition logic: from price competition to product upgrades, speeding up the effect of top players in the future (1) Before 2019, the industry was embroiled in a homogenized price war. After 2019, leading companies increased single-unit profits by reducing costs through the supply chain (Yadea's battery cost continued to decline), channel reform, and economies of scale. Yadea's net profit margin increased from 5.8% in 2015 to 8.6% in the first half of 2025, with the scale effect of leading companies leading to cost dilution, as well as the increase in single-unit gross profit brought by the consolidation of the upstream industry chain and sales structure. (2) From 2020 to 2025, the market share of high-end configurations of domestic electric two-wheelers will increase from 2% to 14%, with the competition focusing on the 3000-5000 yuan price range. Leading companies are increasing investment in smart technology, Jiuhao is positioning itself in the differentiated mid-to-high-end smart car track, Yadea and Aima are following suit with smart car software subscription models, while also expanding into new technologies such as sodium batteries and smart driving systems. (3) The report believes that the core competitive factors in the industry have shifted from "price competition" to "product upgrades", and the competitive situation has shifted from "full industry competition" to "concentration of leading players". Leading industry players such as Yadea, Aima, and Jiuhao stabilize the basic market demand through their profit margin advantage, and they continue to expand the market for smart cars through upgrades in smart technology and user mental development. Future competition will concentrate on the mid-to-high-end market, and the positive cycle of "economies of scale + product upgrades - concentration of leading players - expanding profit advantage" will continue, with the relative market share and profit advantage continuing to grow. Risk warning: Industry sales fall below expectations; intensified industry competition; new technology iterations and demand fall below expectations.