China Securities Co., Ltd.: Mergers and acquisitions have opened a new phase of industry consolidation, with electric motorcycles becoming a core growth engine.

China Securities Co., Ltd. released a research report stating that the deep adjustment in the two-wheeled vehicle industry is nearing its end, with a high probability that the profit bottom has already emerged, and merger and reorganization is opening a new phase of industry integration. In the first half of 2026, domestic electric two-wheeler sales are expected to decline year-on-year by 5%-8% due to threefold impacts: high base exhaustion, transitional pains from the new national standards, and the retreat of national subsidies. After the adaptation period for the new national standards in 2027, demand is expected to recover. The industry CR3 remains high, with shares of new forces continuing to increase, and electric motorcycles becoming the core growth engine. While the profitability of six listed companies has generally declined, there is already a repair inflection point appearing in Q2, with the repair slope showing new forces > leading companies > second-tier companies. The main points of China Securities Co., Ltd. are as follows: The industry as a whole is under pressure, and short-term recovery is limited; the demand turning point is expected in 2027. In the first half of 2026, domestic sales of electric two-wheelers were 28.252 million units, a year-on-year decrease of 12.6%. The industry weakened due to three factors: prior national subsidy demand exhaustion, cost increases from the implementation of new national standards, and the retreat of national subsidies. Q1 marked the bottom of the adjustment, and Q2 showed a narrowing of the decline. The peak season from July to September, combined with the low base, is an important verification window; systematic recovery in the industry will need to wait until the end of the new national standards' adaptation period in 2027. The competitive landscape is significantly differentiated, with new forces vying for market share, and electric motorcycles becoming the core growth track. The CR3 remains at a high level of 58.1%, with tail-end brands accelerating their exit. Yadea has demonstrated resilience as a leading company, while Aima faces considerable revenue pressure; new forces such as Ninebot, Niu Technologies, and Jike have shown counter-trend growth, being the only source of net market share increase; second-tier brands are generally retracting. Traditional leading brands adopt a strategy of reducing volume while raising prices, whereas new forces exchange price for volume; the trend of "self-rotating motorcycles" is clear, with electric motorcycles experiencing rapid growth; new forces are quickly expanding their store presence, but the output of individual stores is being diluted. Overall profitability is under pressure, but Q2 has shown a repair inflection point, with significant differentiation in corporate profitability quality. Net profits of the six listed companies have all declined, with Q1 marking the profit bottom and the repair slope in Q2 showing new forces > leading companies > second-tier companies. The differentiation in profitability per vehicle falls into three categories: new forces suffering from gross margin damage, rigid spread of corporate expenses, and variation in cost transmission capability. The industry's cash flow has generally worsened, with Aima's negative cash flow being a cause for concern; most companies have increased inventory, with some experiencing a rise in accounts receivable. Yadeas acquisition of Jin Jian marks the industrys entry into a multi-brand competitive era. In 2027, there is hope for a threefold catalyst with demand recovery, electric motorcycle upgrades, and overseas volume expansion. Investment recommendations The industry's profit bottom has basically been established, with attention on the Q3 peak season performance. Recommended companies include Ninebot, Niu Technologies, YADEA, and Aima Technology Group. Ninebot has notable intelligent barriers, and gross margins are expected to improve; Niu's core two-wheeler business is reaching breakeven, and there is an opportunity for a performance reversal after clearing scooter inventory; Yadea has outstanding leader advantages, and the acquisition of Jin Jian enhances its matrix, benefiting from industry cleaning; Aima has a solid channel foundation and is anticipated to see profit recovery in the second half of the year. Risk warnings: Risks of domestic demand recovery falling short of expectations, risks of intensified industry price wars, risks of rising raw material costs, and risks of overseas business expansion not meeting expectations.