Guosen: Maintaining a "outperform" rating for YADEA (01585), electric two-wheeler entering foreign markets is expected to open up growth opportunities.

Guosen released a research report stating that considering the possibility of certain demand being exhausted due to the policies of trade-in subsidies for YADEA (01585) in the industry by 2025, as well as increased investments in the development of new national standard products, it is expected that the net profit attributable to shareholders for the years 2026/27/28 will be 32.76/36.66/40.78 billion yuan respectively, with earnings per share of 1.05/1.18/1.31 yuan respectively, corresponding to a PE ratio of 12/11/9 times. The "outperforming the market" rating is maintained. Guosen's main points are as follows: Industry growth driven by trade-in subsidies for old vehicles in 2025, with rapid recovery in revenue and profit In 2025, the company's operating income was 37.01 billion yuan, an increase of 31.1% year-on-year, and net profit was 2.91 billion yuan, an increase of 128.8% year-on-year. In 2025, the trade-in subsidies for old vehicles in the electric two-wheeler industry promoted sales growth, and by the end of 2024, the company actively reduced inventory to maintain a healthy inventory level. In 2025, there was no large-scale price war in the industry, and the overall revenue and profit of the company recovered quickly. Significant recovery in profit margin in 2025 In 2025, the company's gross profit margin was 19.1%, an increase of 3.9 percentage points year-on-year, compared to an increase of 2.2 percentage points in 2023. The net profit margin was 7.9%, an increase of 3.4 percentage points year-on-year, compared to an increase of 0.3 percentage points in 2023. With the growth in sales volume driven by trade-in subsidies for old vehicles and no large-scale price war, the company's profit margin continued to recover, with the gross profit margin reaching its highest level since 2017, and the net profit margin achieving a new high. In 2025, the company's sales/management/research and development/financial expense ratios were 4.4%/3.0%/3.8%/0.1%, and the comprehensive expense ratio was 11.3%, a decrease of 0.4 percentage points year-on-year, with a slight decrease in the comprehensive expense ratio mainly due to the improvement of scale effects and a decrease in management and research and development expense ratios. The era of smart equality in two-wheeler transportation is coming, continuous expansion of stores and improvement of store efficiency to promote profit growth In March 2026, Yadi launched the Guanneng Intelligent Technology Carnival, officially releasing the Guanneng Great White Shark II, Guanneng Starship II, and Guanneng i7 flagship products, showcasing the accumulated expertise in the field of smart electric vehicles. The era of smart equality in the two-wheeler transportation industry is approaching, creating a comprehensive solution for smart travel. In addition, the company continues to increase the number of terminal channels. In 2023, the company had 4,000 distributors and 40,000 sales points, and in 2026, the company will further expand the channel coverage and focus on improving store efficiency in order to better empower end consumers, potentially promoting sales and profit growth. Active layout in the Southeast Asian market, creating a new growth curve The Southeast Asian motorcycle market has a large space, and with the rise in oil prices, the trend of electric two-wheelers replacing motorcycles is expected to accelerate. The company has production bases in Indonesia, Vietnam, and Thailand. In 2026, Yadi's factory in Haiphong, Vietnam will start production, with an initial annual capacity of 1 million units, eventually planning to increase it to over 2 million units; in 2025, the company will build a new factory in Indonesia, which will have an annual capacity of 3 million units; in addition, the company's production base in Thailand is gradually starting production. The company will continue to expand production scale in Southeast Asia, deepen sales networks, and the overseas expansion of electric two-wheelers is expected to become a new growth point for the company. Risks: The pace of policy implementation is slower than expected, industry price wars, weak consumer purchasing power, lower than expected new car releases and sales, and excessively high inventory levels.