CICC issued a research report stating that YADEA (01585) has improved its product structure and implemented multiple cost reduction measures, leading to an upward revision of 25E/26E net profit attributable to shareholders by 12%/12% to RMB 3.0/3.5 billion. The current stock price corresponds to 12x/10x 25/26E P/E ratios. The firm maintains its outperform rating and HK$18 target price, representing 17x/14x 25E/26E P/E ratios with 40.4% upside potential from current levels.
The company announced its 1H25 results: YADEA achieved operating revenue of RMB 19.19 billion, up 33.1% year-over-year; net profit attributable to shareholders reached RMB 1.65 billion, up 59.5% year-over-year.
**Strong Sales Growth in First Half with Sequential Product Mix Improvement**
In 1H25, the company sold 8.794 million units, up 37.8% year-over-year, benefiting from both low base effects and trade-in programs. Additionally, the company's Modern series, Crown T35, and White Shark series received positive market feedback, with sales growth significantly outpacing the industry. Breaking down by category, electric scooter sales reached 2.128 million units (up 12% year-over-year), while electric bicycle sales hit 6.666 million units (up 49% year-over-year). Battery sales reached 9.384 million units, up 40% year-over-year.
The company's average selling price per unit in 1H25 was RMB 2,182, up RMB 99 sequentially, with higher-priced products gaining market share. The year-ago period had a higher proportion of Crown series products and elevated lead-acid battery costs creating a high base, while this year saw increased sharing product proportions.
**Margin Expansion with Record Unit Profitability**
1H25 gross margin reached 19.6%, up 1.6ppt year-over-year and 7.4ppt sequentially, primarily driven by improved product structure, increased battery self-supply ratio, and platform-based production and R&D. From segment data, battery and electric drive business gross margin was 11%.
In 1H25, selling/R&D/administrative expenses were RMB 0.82/0.53/0.62 billion respectively, representing expense ratios of 4.3%/2.8%/3.3%, down 0.2ppt year-over-year and 2.4ppt sequentially combined. Net margin reached 8.6%, up 1.4ppt year-over-year. Net profit per unit was RMB 188, or RMB 150 excluding other income, both reaching record highs.
**Peak Season Sales Outlook Positive, Actively Pursuing High-Quality Growth**
Considering the production halt of old national standard models on August 31st, CICC expects Q3 shipments to maintain rapid growth, fully meeting September-November terminal sales demand. Looking ahead to next year, the firm believes industry sales concerns are overblown given policy support, product innovation, and replacement demand drivers. New national standards also favor market share concentration toward leading players.
The company's industrial chain integration achievements are gradually materializing, with successive launches of high-performance self-developed lead-acid batteries and sodium battery pre-research to enhance product competitiveness. The push for lead-acid battery aftermarket deployment shows considerable potential space and could contribute incremental performance.
The company actively pursues high-quality development, strengthening existing premium series while planning high-end brand launches to complete product matrix and deepen commercial market deployment, which should drive unit price increases. Internationally, the company continues comprehensive system deployment in marketing, services, and finance, potentially opening growth opportunities in the medium to long term.