The year 2024 has become a significant year for policy in the two-wheeled electric vehicle industry.
The Ministry of Industry and Information Technology (MIIT) has initiated the revision of the new national standards; three departments jointly issued the "Regulatory Conditions for the Electric Bicycle Industry" and the "Administrative Measures for the Announcement of the Electric Bicycle Industry Standards," standardizing the operation of manufacturers to enter the whitelist. In addition, the mandatory national standards for "Electrical Safety Requirements for Electric Bicycles" and "Safety Technical Requirements for Chargers Used in Electric Bicycles" have also begun to be revised.
Reflecting on the demand side, consumers will have higher expectations for products and services, with delayed demand being released, and after a brief period of observation, they will choose brands with strong competitiveness. On the supply side, the policy will undoubtedly accelerate the industry's exit and integration. Against the backdrop of competition for market share, the "key to victory" among enterprises still lies in innovation and optimization, and a new round of development opportunities brought about by the upgrade of products and services is expected.
Under the new supply and demand relationship, leading enterprises such as Yadea may be the players that stand out. From the recently released 2024 interim performance of Yadea Holdings (hereinafter referred to as "Yadea"), its own development strategy has been in line with policy orientation for a long time, and it has continuously achieved operational results.
It can be said that Yadea is an appropriate observation sample, and through it, one may be able to see the positive changes that policies bring to the industry.
Profit quality has been further improved, seizing the opportunity for industry growth.
Since the implementation of the new national standard in 2019, the two-wheeled electric vehicle industry has accelerated its exit, resource concentration has continued to increase, and the industry development has been upgraded to a "value war" that competes on brand and product value. As a leader in the industry, Yadea has achieved seven consecutive years of global sales first and more than 80 million global users.
Looking back at the past few years, Yadea's revenue has been growing rapidly, with a CAGR of 23.77% from 2019 to 2023, and the net profit margin has been increasing year by year since 2020.
It is evident that Yadea has seized the development opportunities brought by the new national standard, and in the context of fluctuating external macro environments and intensified competition among the top players, it has been able to take the initiative in the "value war," demonstrating strong economies of scale and brand value. The proposal of the last round of new national standards for electric bicycles was the starting point for Yadea's rapid performance improvement.
Looking at the development of the two-wheeled electric vehicle industry, before 2013, the industry was in a high-speed development phase of the incremental market, with product homogenization lacking in high-end offerings; from 2013 to 2018, the industry entered a phase of competition for market share, with channel wars and other factors accelerating industry reshuffling; from 2019 to 2023, the new national standard put forward higher requirements for the industry, the industry's structure was optimized, and it gradually embarked on high-quality development.Market data indicates that regardless of whether the industry is in a period of rapid growth or a limited incremental environment, Yadea has maintained a growth posture across every industry phase. Its market share has increased from less than 10% in 2013 to about 11% in 2016, and now it has broken through 30%.
Yadea continuously expands and upgrades its production capacity, from exploring high-end products to practical value, presenting to the market the battery-swapping series, the Crown Energy series, and the high-end brand Feiyue, forming industry benchmarks and meeting the market's diverse needs, leading the entire industry towards high quality and innovation.
Under the guidance of the latest industry policies, industry production standards are becoming more standardized, posing higher demands on product production, sales, and usage. This means that the marginal effect brought by purely competing on sales volume is diminishing, and the industry's "value war" is accelerating its return. Yadea, which has long led the industry's development, has ample strength to seize growth opportunities first.
Technological innovation leads high-value competition, and Yadea continues to take the lead in the second half.
In the previous phase of the industry, there were still some "gray" manufacturers that survived on simple assembly and piecing together, with quality and safety issues reflecting their technological backwardness, which has become a long-standing pain point in the industry.
As policies further accelerate the industry's "survival of the fittest," guiding the intensification of high-value competition, the top players with core technologies will undoubtedly survive. In the long run, whether a company has technology is no longer the decisive factor in competition between enterprises, but rather different technological routes and different technological ecosystems determine the order in the industry.
In leading industry innovation and upgrading with technology, Yadea's mission is to focus on users and make technological innovations that enhance practical application value. The author had a deep experience at the "Yadea Practical Technology Global Launch" held not long ago. Yadea globally premiered four practical technologies, focusing on endurance, safety, comfort, and intelligence, which are also the four core areas that consumers care about, making technological upgrades.
It can be seen that Yadea is creating high-value mobility products and ecosystems, continuously investing in technology research and development, and continuously delivering research results. Since its listing in 2016, Yadea has invested a total of 4.78 billion yuan in R&D, with 1.192 billion yuan invested in 2023 alone, which is enough to reflect its R&D intensity.
It is worth mentioning that not long ago, the Ministry of Industry and Information Technology released the first batch of enterprises that meet the "Electric Bicycle Industry Standard Conditions," and Yadea was prominently listed. According to He Yaqiong, director of the Consumer Goods Industry Department of the Ministry of Industry and Information Technology, the "white list" will become an important tool for implementing various policies for electric bicycle enterprises. Hubei Province has taken the lead in action: on August 27, the People's Government of Hubei Province announced at a related press conference that the "white list" was included as a prerequisite for the province's electric bicycle exchange for the old. Some experts also predict that the "Standard Conditions" may be linked to policy subsidies such as the exchange for the old in various regions in the future. It can be foreseen that the "white list" will continue to play a key guiding role in the development of the industry, and being able to occupy "half of the river and mountains" among the six selected enterprises is undoubtedly a high recognition of Yadea's "hard strength" by the authorities.
Quality enterprises represented by Yadea are promoting the industry to accelerate towards healthy and sustainable development, leading the new direction of industrial upgrading with technological innovation.In the short term, policy guidance optimizes the industry structure, and Yadea, as a leading enterprise, will gain a more favorable business environment and achieve more performance growth. In the long term, Yadea actively invests in research and development, accelerates the construction of competitive barriers, leads the industry's high-quality development, and will also enjoy unexpected profit growth.
Value investment's rare opportunity, benefiting from the continuous prosperity of the industry
Back to the logic of value investment, how is the quality of Yadea Holdings as an investment target? From the perspective of long-term investors, this can be discussed using a top-down approach.
1) At the policy level, the replacement dividend brought by the new national standard has not been fully released. Coupled with the new industry policies released this year, the demand for elimination and replacement has always existed. In addition, the large-scale policy of trading in old products for new ones has been implemented in various cities, further expanding the update demand for two-wheeled electric vehicles.
According to Deloitte's data forecast, 62.1% of the two-wheeled electric vehicle industry's consumption demand in 2024 will come from replacement demand, and China's two-wheeled electric vehicle ownership has reached 420 million, which can stably release a large scale of old car replacement demand. Consumers tend to simply choose leading brands with stronger product strength and higher trust, which will bring sales growth for Yadea.
Looking at a larger cycle, under the background of China's "dual carbon" strategy continuously upgrading and the country's strong promotion of industrial intelligence and green low-carbon, two-wheeled electric vehicles, as a national-level travel tool, can expect more policies to promote industry development in the future, supporting the market's steady growth in the long term.
2) At the market level, two-wheeled electric vehicles are a must for medium and short-distance travel, and consumers have long-term consumption demand initiated by themselves. In addition, the rapid development of commercial applications such as instant delivery and shared travel, which have a high dependence on two-wheeled electric vehicles, promotes the shortening of car purchase and replacement cycles, bringing incremental demand for B-end.
Previously, through observing performance, it has been verified that Yadea has the strength of technological innovation and supply of high-quality products, and is expected to win high-quality competition in product dimensions, obtaining C-end and B-end market demand. With the leading effect becoming apparent, Yadea will enjoy alpha growth that outperforms the industry.
3) At the business level, Yadea actively lays out and develops new growth points, and has achieved comprehensive overseas development in research, production, supply, sales, and service. In recent years, the overseas market has ushered in new development opportunities, and the compound annual growth rate of two-wheeled electric vehicle sales from 2023 to 2027 is predicted to reach 25.6%, with a broad global market space facing Yadea.
According to the "Electric Two-Wheeler Market Information Report" released by the research institution Market Research Future, by 2030, the market size of two-wheeled electric vehicles will exceed 100 billion US dollars (about 700 billion yuan), with a compound annual growth rate of 34.57% from 2022 to 2030, which will be a new opportunity for Chinese two-wheeled electric vehicle enterprises.This year, Yadea's value potential has been widely recognized by professional institutions. In its research report, Bank of Communications International pointed out that it is optimistic about the electric two-wheeler manufacturers in the middle of the industry chain, who will benefit most directly from the increasing demand for electric two-wheelers. Founder Securities upgraded Yadea Holdings to a "strongly recommended" rating, Debon Securities gave it a "buy" rating for the first time, and Guotai Junan gave it an "accumulate" rating for the first time.
Therefore, under the influence of multiple positive factors, the "underwater iceberg" of the two-wheeler electric vehicle industry has not been fully revealed.
Based on the company's continuous improvement in business strength, product strength, technical strength, and industry chain strength, Yadea will meet the growing consumer demand and lead the industry's high-quality development. It can be seen that Yadea has "scarcity" in the two-wheeler electric vehicle industry, and as an investment target, there is a broad imagination space.
Summary:
In summary, with the implementation of policies taking effect, the industry will develop in a standardized and healthy manner in the medium and long term. Yadea, with technological innovation as the main driving force, has multi-dimensional capabilities and will fully enjoy the dividends of market development, maintaining growth in performance. In the long run, Yadea's growth posture is clear enough, and for long-term investors, it will be a rare value opportunity.
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