Yadea Group Holdings Ltd. is a Chinese investment holdings company primarily focused on the development, manufacturing, and sales of two-wheeled electric vehicles. Yadea’s main products include electric bicycles, electric scooters, batteries, chargers, and electric two-wheeled vehicle parts.
It is now the largest position in the portfolio, making up a total exposure of 9.21%, as of yesterday. China's stock market has underperformed other nations all year, however, there is a lot of potential for the Chinese economy as was discussed in last week's article which you can access here: www.mjtheconsultant.com/blog.
Yadea was the global leader in the e-scooter market in 2021, and with e-scooter sales up 12.4% over the past year, it puts Yadea in a promising position for future growth.
Yadea is a hot stock right now, coming off a May stock rally where the company experienced growth of 16.5%. However, Yadea's share price is still down over 10% YTD, making it an attractive stock to buy. Yadea raised over 110M in May from a large primary placement which came as a surprise to some. The company sold 68.8M new shares to Hong Kong investors during after-hours trading. This was equal to 2.25% of its enlarged equity capital. Yadea offered this stock at a fixed price of HK$12.58 a share, which was attractively discounted by 10% from its last close. The current share price of Yadea is HK$14.52. $HKG50
Being a Chinese company can arguably give Yadea some advantages over other companies in the same industry. $China50 China has the fastest-growing middle class in the world, and as was mentioned in the last article, many analysts see China becoming the largest economy. Although Yadea sells its products in over 80 nations, China accounts for 98% of sales. The current economic conditions do bring risk to many tech companies, but it also drives down the prices of fundamentally stable companies. In terms of performance, Yadea ended 2021 with revenue up over 23%, net income up over 38%, and its net profit margin up over 12% YOY. Being founded in 2001, the company has over 20 years under its belt and is now the largest manufacturer of electric two-wheeled vehicles. Yadea has 7 production facilities across China resulting in a production capacity of over 12 million vehicles and over 3,000 employees. Yadea has over 34,000 stores worldwide, over 45 million users, and a market share of 22%.
Source: BloombergNEF. Notes: ‘ETS‘ stands for Economic Transition Scenario and ‘NZS‘ stands for Net Zero Scenario.
Another major factor in analyzing Yadea is to look at the products it is making and how this sets them apart from competitors. The GM of Yadea said:
"Yadea has always been an e-mobility pioneer. From our extensive investment into R&D to our focus on product quality and design, we are truly committed to carving out a sustainable future with products that bring happiness, comfort, and safety to drivers.”
Yadea offers over 50 e-scooter models, but nearly half of last year's sales have been generated by the new line that was launched in early 2021. This year's major improvements include increased battery life coming from the TTFAR8-level extended range system. Yadea also swapped out the old lithium batteries for a graphene lead-acid battery, which has improved the endurance of the vehicles. There has been a joint venture between Yadea, Gogoro, and Dachangjiang Group (DCJ) which is one of China's largest manufacturers of motorcycles. Together the companies are investing 50M into an operating company that makes new e-scooters using the Gogoro Network. Beyond improved power, energy, and intelligence systems, Yadea is also putting an emphasis on creating slick new designs for their vehicles. The company has recently revealed a new partnership with Studio F.A. $PAH3.DE (Porsche Automobil Holding SE) which goes to show their emphasis on design and innovation.
With China's economy on the rise, a fast-growing electric two-wheeled vehicle industry, and the increased innovation taking place at Yadea, this stock is very promising. The markets are in an interesting place right now, with global inflation rates high, a war taking place in Ukraine, and lingering threats from Covid. Many see the woes in China to be on the decline, however, there are still global threats investors must be aware of. China is clearly the leader in the two-wheeled electric vehicles market and this will only continue to grow as the population and economy advance. Electric vehicles are the future, and Yadea has a large share of that market in the hottest spot for EVs on the planet. Although there are many competitors in the space, none have the design and quality elements that Yadea has, especially with its newly formed partnerships with companies like Porsche and Gogoro. Overall, Yadea has the potential to generate significant returns for investors.
Source: BloombergNEF. Notes: ‘Southeast Asia’ refers to Indonesia, Malaysia, Philippines, Thailand and Vietnam. ‘Europe’ refers to the EU, the U.K., and EFTA countries.
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