Citi lowers YADEA's target price to 18.1 yuan and reduces net profit forecasts for this year and next

According to YADEA (01585.HK)'s profit alert, Citigroup raised its net profit forecast for 2025 by 3% to RMB 2.967 billion (same below), assuming an annual sales volume of 16.3 million units.

However, considering the demand boost from the early implementation of the trade-in subsidy in 2025 and the uncertainty regarding consumer acceptance of new standard products, the revenue forecasts for 2026 and 2027 were lowered by 9% to 12%, to RMB 39 billion and RMB 41.5 billion, assuming sales volumes of 17 million units and 17.5 million units, respectively.

At the same time, based on improvements in product mix and cost control, the gross profit margin forecasts for 2026 and 2027 were raised by 0.2 to 0.6 percentage points, to 19.5% and 19.8%; net profit forecasts were lowered by 11% to 17%, to RMB 3.231 billion and RMB 3.628 billion, based on more conservative operating expense forecasts. The target price was reduced from HKD 22.5 to HKD 18.1, maintaining a "Buy" rating