"Leading player in the electric two-wheeler sector" - Yadea Holdings (01585), continues to stride firmly towards anchoring to farther, deeper, higher grounds.

Under the trend of consumption upgrade among the masses, when consumers choose electric vehicles as their main mode of transportation for short to medium distances, apart from focusing on product pricing, appearance design, and endurance, the quality and safety level of the products are gradually becoming key decision factors. This consumption upgrade indirectly raises the industry's entry barriers, providing more development opportunities for reputable manufacturers in the industry with complete production qualifications, accelerating market clearance, and gradually concentrating market share towards top companies like Yadea.

It is worth noting that the safety compliance of electric bicycle products not only attracts significant attention from consumers but also receives strong support from national policies. In 2024, the electric two-wheeler industry once again enters a period of intensive policy releases, ushering in a new round of reshuffling under the catalysis of new policies. As an industry leader, Yadea greatly benefits from policies, stepping into a new phase of high-quality development.

Policy catalyst, leading enterprises once again demonstrate the "siphon effect".

According to the Securities Times APP, in mid-August, the Ministry of Industry and Information Technology released the first batch of enterprises that meet the "Specifications for the Electric Bicycle Industry" (commonly known as the "white list"), where Yadea occupied 3 out of the 6 positions, dominating a considerable portion.

After the "white list" was introduced, the Ministry of Commerce and five other departments issued the Implementation Plan for Promoting the Replacement of Old Electric Bicycles with New Ones (referred to as the "Implementation Plan" below), organizing qualified products from compliant electric bicycle manufacturers to participate in the consumer-oriented old-for-new activities, marking the first time the country has introduced a policy of replacing old electric bicycles with new ones.

According to the interpretation by the Circulation Development Department, the "Implementation Plan" promotes consumers to replace their personally owned old electric bicycles with qualified new ones at various stages such as production, sales, and old-for-new activities. At the same time, the Circulation Development Department suggests that consumers should give priority to purchasing qualified electric bicycles produced by enterprises listed in the Announcement of Conformity to the "Electric Bicycle Industry Standard Conditions" (referred to as the "white list").

Currently, the "white list," the "Implementation Plan," and other policies have yielded immediate results. On August 27th, Hubei Province took the lead in introducing measures to support the replacement of old electric bicycles with new ones, offering a maximum subsidy of 500 yuan for the purchase of new qualified electric bicycles produced by enterprises listed on the "white list." Following suit, Hainan, Sichuan, Yunnan, Hebei, and other regions have successively introduced relevant implementation plans.

With the successive introduction and implementation of two major industry policies, on September 19th, the Ministry of Industry and Information Technology, together with the Ministry of Public Security, the Ministry of Emergency Management, and other departments, launched a one-month public consultation on the latest revised "Technical Specifications for Electric Bicycle Safety," focusing on further improving and enhancing the "new national standard" in key aspects such as enhancing fire resistance, preventing illegal modifications, and vehicle weight limits related to user travel safety.

With the attention and guidance from the country on the industrial upgrade of the electric bicycle industry, the safety level of electric bicycle products has been further enhanced, and related standards and industry norms have become prerequisites for industry market access. Compliance will also become the industry's inevitable choice. In the process of compliance, the industry will face a new round of reshuffling, especially manufacturers whose products are selected for the "white list" will receive more market opportunities and policy support. Additionally, benefiting from years of high-quality product standards and service levels, these high-quality enterprises will increasingly be favored by consumers, promoting the industry's transition from quantity to quality. Meanwhile, some manufacturers with lagging production and research capabilities, relying solely on assembly and sales, in the "gray" area of the industry will further lose competitiveness, eventually finding it difficult to sustain operations and fading from consumers' view.

Embarking on a new journey, Yadea consolidates its core capabilities and anchors for the long term.

Currently, the number of electric two-wheeler vehicles in China has exceeded 400 million, the cultivation of consumers is basically completed, and the future replacement demand will ensure long-term stable sales in the industry. Facing new market opportunities, top enterprises represented by Yadea will continue to strengthen core capabilities in multiple dimensions such as research and development, brand, channels, and production capacity to maintain long-term leadership in competition.

According to the mid-year reports for 2024 released by various companies, Yadea's sales of electric two-wheeler vehicles still lead in the domestic two-wheeler market share, and Yadea remains the largest enterprise in the electric two-wheeler industry.

According to the Securities Times APP, since its listing in 2016, Yadea has cumulatively invested 478 billion yuan in research and development. By the end of 2023, Yadea holds over 2,000 patents, with 2 CNAS national enterprise laboratories, 6 industry-leading technology R&D centers, 8 global intelligent manufacturing bases, and 1 national industrial design and technology center.

To enhance the core competitiveness of its products, Yadea continuously optimizes the upstream and downstream layout of the industry chain, creating a large number of research results driving high-quality industry development in fields such as travel technology and energy technology. At the same time, breakthrough progress has also been made in self-developed technologies such as three-electric systems. With cutting-edge technology, Yadea's Crown series, underpinned by innovation, became the first single series product in the industry to break sales of over 15 million units.

Consumers' purchasing decisions on electric two-wheeler products usually focus on test-driving experience, post-purchase convenience, etc. Therefore, extensive sales outlets not only increase consumer touchpoints but also effectively enhance brand exposure and sales conversion. Over the years, Yadea has continued to expand its distribution network, deepen market penetration, exporting to 100 countries, gaining the trust of over 80 million users globally, establishing a global sales map covering over 40,000 terminal stores, with channel coverage ranking first in the industry. A well-established channel layout allows Yadea to seize the opportunity of industry expansion, building competitive barriers for the company.

The market is not limited to domestic market. Yadea, committed to "serving global users and becoming a world-class enterprise," is also striving to replicate its core capabilities in overseas markets. Currently, Yadea is focusing on replicating its core capabilities in the Southeast Asian market as part of its international expansion. In early 2024, the company laid the foundation for a factory in Vietnam, and in March, the first vehicle was delivered from Yadea's factory in Indonesia, followed by the groundbreaking ceremony in May at the Indonesian factory.

Frost & Sullivan predicts that by 2026, the sales of electric two-wheelers in overseas markets could reach 46.3 million units, with promising sales in Europe, America, Southeast Asia, and the Indian market.

According to Fangzhen Securities research reports, in 2020, the total number of motorcycles in major Southeast Asian countries reached 0.25 billion units. Against the backdrop of the transition from gasoline to electric, the huge stock of motorcycles in Southeast Asia will become a potential market for electric two-wheelers. Fangzhen Securities believes that Yadea Holdings is gradually entering an accelerated period in overseas markets, with performance expected to gradually increase. It maintains a "strongly recommended" rating for Yadea Holdings.

Based on the bullish outlook for Yadea's future development, several brokerages have recently given Yadea "buy" and "increased holding" ratings. Being widely recognized by brokerages is advantageous for investors to discover the investment value of Yadea, attract fund deployment, enhance stock liquidity, and create greater investment returns for investors.

Conclusion

According to Zhitong Finance APP, the outcome of the competition among electric two-wheeler companies does not solely depend on the sales end of buying and selling, but rather on how companies refine key capabilities, forge products that consumers want to buy, transform superior products into brand strength, and embed them in consumers' minds. Yadea focuses on enhancing its core competencies to provide consumers with higher-quality electric two-wheeler products. With its leading advantage in the industry and solid foundation, Yadea has the potential to capture a larger share of the global electric two-wheeler market, entering a new growth "strong cycle".