"Large Banks" Huayan lowered YADEA's target price to 17 yuan, rating "Buy," preliminary performance last year exceeded expectations

HSBC Research published a report stating that YADEA (01585.HK) had preliminary results last year that exceeded the bank's expectations. The resilience of demand for electric two-wheelers (e2W) will support the industry's sales recovery, and YADEA's market share growth is expected to continue. The bank maintains a "Buy" rating on YADEA, with a target price adjusted from HKD 18 to HKD 17 based on discounted cash flow.

The bank indicated that the company is waiting for a demand recovery and expects a sales peak after the Spring Festival holiday. YADEA's net profit for the full year of 2025 is expected to be no less than RMB 2.9 billion, slightly higher than the bank's expectation of RMB 2.89 billion. Nevertheless, YADEA's stock price has fallen 3% since the beginning of the year. HSBC Research believes the main reason is the industry's off-season and the challenges brought by the transition to new national standards, leading to insufficient market confidence in the demand outlook for electric two-wheelers.

HSBC Research holds an optimistic view on YADEA's operational prospects, mainly based on the following points: the industry will enter a peak season after the Spring Festival holiday, with demand from returning migrant workers and students providing momentum; YADEA's current electric bicycle products are mainly basic models, but with an increase in the supply of more popular high-end models, dealers are expected to replenish their inventories; as industry participants deepen their understanding of policy direction, market demand, and product design, consumer acceptance is improving; in regions where motorcycles are allowed, demand is shifting towards electric motorcycles, which may further enhance YADEA's average selling price.

The stock is currently trading at a forecasted price-to-earnings ratio of 9 times for 2026, with a projected dividend yield of about 5% for 2025