Guosen Securities has released a research report maintaining an "Outperform" rating on YADEA (01585). The report notes that while industry-wide trade-in subsidies in 2025 may pull forward some demand and investments in new national standard product development are increasing, the firm forecasts net profits attributable to shareholders for 2026, 2027, and 2028 to be 3.276 billion yuan, 3.666 billion yuan, and 4.078 billion yuan, respectively. Earnings per share are projected at 1.05 yuan, 1.18 yuan, and 1.31 yuan for those years, corresponding to price-to-earnings ratios of 12, 11, and 9 times.

Key viewpoints from Guosen Securities are as follows:

The trade-in policy in 2025 is expected to stimulate industry growth, leading to a rapid recovery in revenue and profit. The company's operating revenue for 2025 is projected to reach 37.01 billion yuan, a year-on-year increase of 31.1%, with a net profit of 2.91 billion yuan, surging 128.8% year-on-year. The trade-in initiative is anticipated to boost sales volume in the electric two-wheeler sector. Following active inventory reduction efforts by the company at the end of 2024, inventory levels remained healthy. The absence of a large-scale price war in the industry during 2025 supported a swift recovery in both overall revenue and profit.

A significant recovery in profit margins was observed in 2025. The company's gross profit margin reached 19.1%, an increase of 3.9 percentage points year-on-year and 2.2 percentage points higher than 2023. The net profit margin stood at 7.9%, up 3.4 percentage points year-on-year and 0.3 percentage points above the 2023 level. The trade-in policy boosted industry sales without triggering intense price competition, allowing for continuous margin recovery. The gross profit margin rose to its highest level since 2017, while the net profit margin hit a new record high. The company's sales/management/R&D/finance expense ratios for 2025 were 4.4%, 3.0%, 3.8%, and 0.1%, respectively, resulting in a comprehensive expense ratio of 11.3%, down 0.4 percentage points year-on-year. This slight decrease was primarily due to improved economies of scale leading to reductions in management and R&D expense ratios.

The era of intelligent technology democratization for two-wheelers has arrived. Continuous expansion of retail outlets and improvements in store efficiency are expected to enhance profitability. In March 2026, YADEA launched its Gunneng Intelligent Technology Carnival, officially releasing three new flagship models: the Gunneng White Shark II, Gunneng Starship II, and Gunneng i7. This event comprehensively showcased the company's advancements in the smart electric vehicle sector, signaling the arrival of an era where intelligent features become widely accessible and forming a complete smart mobility solution. Furthermore, the company is consistently increasing its number of terminal channels. In 2023, it had 4,000 distributors and 40,000 sales points. By 2026, the company plans to further enhance channel coverage while focusing on improving sales efficiency per store, thereby better serving end consumers, which is likely to boost both sales volume and profits.

The company is actively expanding into the Southeast Asian market to establish a new growth trajectory. The gasoline motorcycle market in Southeast Asia is substantial, and against a backdrop of high oil prices, the trend of electric two-wheelers replacing gasoline models is expected to accelerate. YADEA has production bases in Indonesia, Vietnam, and Thailand. Its factory in Bac Ninh, Vietnam, commenced operations in 2026 with an initial annual capacity of 1 million units, with plans to gradually increase this to over 2 million units. In 2025, the company established a new factory in Indonesia, which upon completion will possess an annual production capacity of 3 million units. Additionally, its production base in Thailand is gradually commencing operations. The company will continue to expand its production scale and deepen its sales network in Southeast Asia, positioning the overseas expansion of electric two-wheelers as a potential new growth driver.

Risk warnings include the pace of policy implementation falling short of expectations, potential industry price wars, weak consumer spending power, new product launches and sales underperforming forecasts, and excessively high inventory levels.