occurrences

Yadi Holdings Reveals 2024 Interim Results

2024H1's revenue YoY was -15.4% to 14.414 billion yuan; gross profit -9.8% YoY to 2.594 billion yuan; attributable net profit -12.9% YoY to 1.034 billion yuan; basic profit per share -13.5% YoY to 0.345 billion yuan.

Stricter regulations & new national standard revisions put pressure on income during the transition period

Industry regulations became more strict in the first half of the year. Combined with adjustments and revisions to the new national standard, the general environment suppressed the company's operations; combined with the company's January-January channel inventory and a high base for the same period last year, Yadi's sales volume in the first half of the year was -22% to 6.38 million vehicles, and the average bicycle price remained stable, with vehicle sales revenue -20% to 9.8 billion; at the same time, battery and charger revenue was -9.6% to 4.1 billion, and electric two-wheeler parts revenue was +72.5% to 0.6 billion. Further, considering the stabilization of the general business environment and demand driven by trade-in policies and subsidies, business recovery may be imminent from the second half of the year to next year.

Operating profit improved, and exchange and subsidies fluctuated

The company's gross margin in the first half of the year was +1.1 pct to 18.0% year on year, mainly benefiting from vehicle product structure optimization and increased gross margin of battery and electric drive products. Among them, battery and electric drive revenue increased +31%, and increased capacity utilization rate drove the business gross margin of +4.8 pct; sales/management/financial expense ratios for the period were -0.6/+0.3/+0.0pct, respectively.

The gross profit margin for the period was +5% year-on-year after deducting three fees, and the operating profit margin was +1.4pct to 7.3%; however, due to fluctuations in factors such as government subsidies and exchange gains and losses, the net interest rate to mother was only +0.2pct to 7.2% year-on-year.

Stricter regulation & whitelist management, share growth or acceleration

Starting in the second half of the year, the share of leading companies such as Yadi is expected to increase at an accelerated pace: on the one hand, the new national standard revisions put forward higher requirements for vehicle safety and supervision, and it will become more difficult to launch products that meet both regulation and consumer needs, and leading technology and R&D capabilities will be highlighted; on the other hand, the industry has begun to implement a white list system. Currently, only 6 of the more than 100 manufacturers have entered the first batch of white lists, of which 3 are on the list; at the same time, starting in August, the country will gradually implement trade-in policies. While boosting demand, subsidies are also expected to lean towards the white list.

The share has increased or entered the acceleration channel to maintain the H1 “purchase” rating. We expect the company's 2024-2026 revenue to be 34.76/44.76/54.2 billion, respectively, +0.0%/+28.8%/+21.1% year-on-year; net profit to mother is 2.75/3.68/4.63 billion, respectively, +4.2%/+33.7%/+25.9%; the corresponding valuation is 10.3/7.7/6.1 times. Considering that the trade-in policy boosts industry demand, the leading share may increase at an accelerated pace in the context of strengthened supervision to maintain the company's “buy” rating.

Risk warning: 1. Industry price competition has greatly exceeded expectations; 2. Industry technology has changed drastically.