UOB Kay Hian
Report Date: Wednesday, 27 August 2025
Yadea Group Holdings: Riding the Electric Mobility Wave—Stellar 1H25 Earnings, Upgraded Target, and Explosive Growth Outlook

Executive Summary

Yadea Group Holdings (1558 HK), China’s dominant electric two-wheeler manufacturer, has delivered an outstanding set of 1H25 results, smashing analyst expectations with a 60% year-over-year surge in net profit. The company’s robust growth is fueled by surging demand, regulatory clarity, stimulus policies, and relentless product innovation. UOB Kay Hian maintains a BUY recommendation, raising the target price to HK\$19.50 (from HK\$16.50), reflecting a potential 82.1% upside from current levels.

Company Profile: Electrifying Urban Mobility

Yadea Group Holdings is a leading manufacturer and seller of electric two-wheeled vehicles, including electric scooters, electric bicycles, batteries, chargers, and related components. Listed on the Hong Kong Stock Exchange (Bloomberg ticker: 1558 HK), the company boasts a market capitalization of HK\$39.3 billion (US\$5.0 billion), with major shareholders Mr. Dong Jinggui (46.72%) and Ms. Qian Jinghong (20.19%).

Key Stock Data

1H25 Financial Highlights: Earnings Surge, Margin Expansion

Yadea’s 1H25 financial performance delivered across all fronts, with several key metrics significantly surpassing estimates. The robust profit surge was mainly attributed to strong sales volume growth and margin recovery, offsetting a minor drop in average selling price (ASP).

Analysis: Drivers Behind the Outperformance

• Sales Volume Surge: Sales of electric two-wheelers soared 38% YoY in 1H25, reaching 8.79 million units and beating expectations. This was driven by pent-up demand, regulatory clarity from the New National Standard, and dealer restocking.
• ASP Dynamics: The average selling price dipped 2.8% YoY (due to lower lead-acid battery costs from falling lead prices), but rebounded 3.6% HoH thanks to an improved product mix. The full-year ASP estimate was trimmed to Rmb1,490, below the initial assumption of Rmb1,559.
• Margin Expansion: Gross margin jumped to 19.6% (up 1.6 ppt YoY and 7.4 ppt HoH), driven by:
  • Product mix optimization
  • Drop in lead-acid battery costs
  • Greater self-sufficiency in battery production (targeting 65% in 2025, up from 50% in 2024)
  • Operating leverage and scale economies improving SG&A and R&D expense ratios
• Cash Flow Strength: Operating and free cash flow soared, reversing negative outflows from the prior year, highlighting robust operational efficiency.

Growth Catalysts: What’s Powering Yadea’s Next Leg Up?

1. Pent-Up Demand: Regulatory overhang was removed by the New National Standard, igniting a surge in electric two-wheeler sales.
2. Stimulus Policies: China’s trade-in subsidy schemes are actively boosting demand.
3. Industry Consolidation: The new regulatory framework, combined with anti-involution campaigns, is expected to eliminate 10-20% of smaller players, enabling Yadea to expand market share as the dominant player.
4. Product Innovation: Launches include:
   • Flagship Guanneng S Series (Rmb 4,600–7,000): High-performance, fast-charging (180-210km range, 80% charge in 15 minutes), anti-theft GPS features.
   • Modern Series: Female-targeted designs.
   • Sodium-ion Battery 2WEV (Rmb 3,600–4,300): Lightweight, safe, fast-charging, 120km range, 80% charge in 15 minutes.
   • Electric bicycles compliant with the new National Standard.
5. Higher Self-Sufficiency: In-house production of batteries will climb from 50% to 65% in 2025, reducing costs and improving margins.

Guidance and Upgrades: Stronger Forecasts Ahead

• Sales Volume Projections: 2025 volume estimate raised by 3% to 17.0 million units. 2026/27 projections remain at 18.15m and 19.96m units, implying annual growth of 31%, 7%, and 10% respectively.
• ASP Adjustments: 2025–27 ASP assumptions trimmed by 4–3% to Rmb1,490/1,550/1,600, factoring in lower-than-expected 1H25 ASP, but expecting a flat 2025 and increases of 4% and 3% in 2026 and 2027 as product mix improves.
• Margin Upgrades: 2025–27 gross margin forecast raised to 19.6% for all three years, compared to the prior assumption of 17.5%, reflecting the current margin outperformance, higher battery self-sufficiency, and operational efficiency gains.
• Profit Per Vehicle: 2025–27 net profit per vehicle assumptions lifted 1–2% to Rmb183/191/199, offsetting lower ASPs with margin gains.
• Earnings Revision: Net profit forecasts for 2025–27 are raised by 7%, 4%, and 4% to Rmb3,225m, Rmb3,596m, and Rmb4,126m respectively.

Valuation and Recommendation

• Valuation: Target price raised from HK\$16.50 to HK\$19.50, based on a 15x PE multiple (historical mean one-year forward PE) rolled over to 2026 and upgraded 2026 EPS.
• Buy Rating Maintained: The upside potential remains highly attractive at +82.1%.

Key Financial Tables

Profit & Loss, Balance Sheet, and Cash Flow Highlights

Key Metrics and Ratios

Conclusion: Yadea’s Strong Momentum Set to Continue

Yadea Group Holdings is executing flawlessly, capitalizing on regulatory clarity, government stimulus, and industry consolidation. The combination of sales volume growth, margin expansion, cash flow strength, and bold innovation pipeline cements its leadership in China’s electric two-wheeler market. With a raised target price and robust upside, Yadea remains a compelling growth story for investors focused on the future of urban mobility and electrification.