UOB Kay Hian Private Limited
Date of Report: Wednesday, 27 August 2025

Yadea Group Holdings Surges with 60% Earnings Growth in 1H25: Outlook Brightens on Robust Demand and Margin Expansion

Overview: Yadea Group Accelerates Ahead of Market with Strong H1 2025 Results

Yadea Group Holdings Ltd (HK: 1585), a leading manufacturer and seller of electric two-wheeled vehicles, has delivered a stellar first half in 2025, reporting a 60% year-on-year surge in net profit that exceeded analyst expectations. Backed by rising sales volumes, improved margins, and favorable industry conditions, Yadea’s performance has prompted UOB Kay Hian to reiterate its BUY rating and lift its target price to HK$19.50, representing an impressive 82.1% potential upside from the current share price of HK$12.82.

Company Snapshot: Yadea Group Holdings

• Industry: Industrials – Electric two-wheeled vehicles (scooters, bicycles), batteries, chargers, components
• Market Cap: HK\$39.3 billion (US\$5.0 billion)
• Major Shareholders: Mr. Dong Jinggui (46.72%), Ms. Qian Jinghong (20.19%)
• Shares Outstanding: 3,064 million
• FY25 NAV/Share: HK\$3.19 | FY25 Net Cash/Share: HK\$5.15
• 52-week price range: HK\$16.96–HK\$9.50

1H25 Financial Highlights: Record Profits and Cash Flows

Yadea’s first-half 2025 results were a clear beat across all major profit metrics, driven by buoyant sales momentum and significant margin recovery.

Key Drivers of Growth: Demand, Innovation, and Policy Tailwinds

• Pent-up Demand: The removal of regulatory uncertainty after the New National Standard announcement late 2024 buoyed end-market demand, leading to dealer restocking and sharp volume growth.
• Stimulus Policies: China’s trade-in subsidy program is spurring new electric two-wheeler purchases, further supporting industry growth.
• Industry Consolidation: Regulatory tightening and anti-involution measures are expected to eliminate 10–20% of smaller competitors’ capacity, allowing Yadea, as the dominant player, to capture additional market share.
• Product Innovation: New launches—including the high-performance Guanneng S Series (RMB4,600–7,000, 180–210km range, 80% charge in 15 minutes), Modern Series targeting female consumers, sodium-ion battery models (RMB3,600–4,300, 120km range, rapid charge), and compliant e-bicycles—are expected to drive further sales momentum.
• Cost Leadership: Yadea is increasing its self-sufficiency in lead-acid battery (LAB) production from 50% in 2024 to 65% in 2025, lowering costs and improving margins.

Margin Expansion and Operational Efficiency

• Gross margin surged to 19.6% in 1H25, exceeding the annual forecast of 17.5%. This was attributed to a favorable product mix, lower battery costs, and enhanced operational leverage.
• SG&A/revenue dropped to 8.0% (-0.1ppt YoY, -0.9ppt HoH), and R&D/revenue fell to 3.3% (-0.2ppt YoY, -1.5ppt HoH), reflecting economies of scale.
• EBIT margin reached 11.0%, up from 9.2% a year ago and well above the full-year expectation.
• Cash Flow Strength: The company generated RMB4.7 billion in operating cash flow and RMB4.2 billion in free cash flow, a dramatic turnaround from negative flows in the prior year.

Upgraded Outlook: Forecasts, Estimates, and Valuation

• 2025–2027 sales volume assumptions have been raised to 17.0m, 18.15m, and 19.96m units, reflecting annual growth of 31%, 7%, and 10%, respectively.
• ASP estimates are trimmed by 4%/3%/3% for 2025–2027, now at RMB1,490, RMB1,550, and RMB1,600, accommodating lower-than-expected 1H25 ASP but assuming a recovery as new models gain traction.
• Gross margin assumptions for 2025–2027 are lifted to 19.6% (from 17.5%), factoring in current performance, battery self-sufficiency, and operational improvements.
• Net profit per vehicle is now expected at RMB183, RMB191, and RMB199 for 2025–2027.
• Net profit forecasts for 2025–2027 have been raised by 7%, 4%, and 4%, reaching RMB3,225m, RMB3,596m, and RMB4,126m, respectively.
• Target Price: The target price is increased from HK\$16.50 to HK\$19.50 (15x 2026F PE), maintaining a BUY recommendation.

Comprehensive Financial Summary

Balance Sheet and Cash Flow Strength

• Ending cash & cash equivalents are projected to rise from RMB7.9 billion in 2023 to RMB19.6 billion in 2026.
• Net debt to equity remains negative, indicating a robust net cash position and low financial risk (from -112.8% in 2023 to -154.8% in 2026).
• Operating cash flow is forecast to grow from RMB299 million in 2023 to RMB6.8 billion by 2026, supporting capital investments and dividend payments.

Key Ratios and Metrics

Valuation and Recommendation

Yadea is valued at 15x 2026F PE, in line with its historical mean. The company’s strong earnings momentum, robust cash flows, and dominant position in a consolidating market underpin a bullish outlook. UOB Kay Hian maintains a BUY rating and raises the target price to HK$19.50, offering an 82.1% upside from current levels.

Conclusion: Yadea Poised for Further Gains as Industry Leader

Yadea Group Holdings stands out as a top pick in China’s electric two-wheeler market, benefiting from structural demand growth, policy support, innovation, and operational excellence. With enhanced forecasts, expanding margins, and a strong balance sheet, Yadea remains well-positioned for continued outperformance and market share gains. Investors seeking exposure to China’s electrified mobility transition should keep Yadea firmly on their radar.