Bank of America Securities released a report indicating that multiple channels of investigation show that YADEA (01585.HK) achieved wholesale volumes of 7.1 million to 7.2 million units in the first five months of 2025, an increase of about 10% compared to the first five months of 2023, but slightly below its sales target of 9 million units for the first half of 2025. The main reasons include: (1) Poor weather conditions in southern China in April; (2) YADEA may give Dealers more flexibility for inventory replenishment in June. The firm now expects YADEA to achieve sales of 8.8 million units in the first half of 2025 and 8.2 million units in the second half.
Bank of America Securities stated that due to sales in April being slightly below expectations, leading to an increase in fixed cost allocation, the firm believes that YADEA's net profit per vehicle in April decreased compared to the first quarter of 2025. However, the firm expects profitability to improve in May, June, and the third quarter of 2025, mainly supported by the following factors: (1) The launch of the Guan S model in May; (2) The introduction of new models (simplified versions) according to the new national standard in the third quarter of 2025. In the fourth quarter of 2025, profitability may be relatively weak due to seasonal factors and the transition to new standards. Considering these factors, the firm has revised down its forecast for YADEA's earnings per share for 2025 and 2026 by 2% and 3% respectively and has downgraded the Target Price from HKD 17.4 to HKD 17. The firm reiterates its 'Buy' rating, as it believes YADEA will have a good outlook in 2025 and is expected to gain market share growth in the long term.
