Investment Rating - The investment rating for the company is "Buy" and it is maintained [6] Core Views - The company continues to show strong growth trends, with revenue reaching 9.855 billion yuan in H1 2025, a year-on-year increase of 30.9%, and net profit attributable to shareholders at 1.002 billion yuan, up 41.35% year-on-year [1] - The all-terrain vehicle segment has seen significant sales growth, with 101,800 units sold in H1 2025, generating revenue of 4.731 billion yuan, a 33.95% increase year-on-year [3] - The motorcycle segment is also performing well, with sales of 150,300 units and revenue of 3.346 billion yuan, reflecting a 3.03% year-on-year growth [4] - The electric two-wheeler segment, "Jike," has emerged as a new growth curve, achieving sales of 250,500 units and revenue of 872 million yuan, a remarkable year-on-year increase of 652.06% [5] - The company has adjusted its profit forecasts upwards due to better-than-expected progress in the all-terrain vehicle and electric two-wheeler segments, projecting profits of 1.858 billion, 2.483 billion, and 2.936 billion yuan for 2025-2027 [5] Financial Summary - For H1 2025, the company achieved a gross margin of 28.38%, a decrease of 3.13 percentage points year-on-year, while the net profit margin increased by 0.75 percentage points to 10.17% [1] - The company’s total revenue for 2023 is projected at 12.110 billion yuan, with a growth rate of 6.44%, and is expected to reach 30.964 billion yuan by 2027 [10] - The earnings per share (EPS) is forecasted to grow from 6.60 yuan in 2023 to 19.24 yuan in 2027 [10]

Core Viewpoint - The motorcycle and all-terrain vehicle sectors continue to grow, with a 25% year-on-year revenue increase in Q2 2025 [2][14]. Financial Performance - In H1 2025, the company achieved revenue of 9.86 billion yuan, a year-on-year increase of 30.9%, and a net profit of 1 billion yuan, up 41.4% [3][15]. - In Q2 2025, revenue reached 5.6 billion yuan, reflecting a 25.5% year-on-year growth and a 31.9% quarter-on-quarter increase, with net profit of 590 million yuan, up 36.0% year-on-year and 41.3% quarter-on-quarter [3][15]. - The company sold 101,800 all-terrain vehicles in H1 2025, generating revenue of 4.731 billion yuan, a 33.95% increase year-on-year [3][15]. - Domestic sales of two-wheeled motorcycles reached 79,100 units, with revenue of 1.697 billion yuan, a 17.35% increase year-on-year [3][15]. - The company sold 250,500 units of its electric motorcycle brand, Jike, generating revenue of 872 million yuan, a staggering 652.06% increase year-on-year [3][15]. Profitability and Cost Management - The company's gross margin in H1 2025 was 28.4%, down 3.1 percentage points year-on-year, while the net margin was 10.6%, up 0.7 percentage points [5][22]. - In Q2 2025, the gross margin was 27.3%, down 3.5 percentage points year-on-year and 2.4 percentage points quarter-on-quarter, while the net margin was 11.0%, up 0.9 percentage points year-on-year and 1.1 percentage points quarter-on-quarter [5][22]. - The decline in gross margin was attributed to the increased proportion of Jike sales and tariffs, while the net margin improvement was due to the volume increase of U10 PRO and internal cost reduction efforts [5][22]. Product Development and Market Expansion - The company is entering a significant product year in 2024, launching several new models to enhance competitiveness in the ATV sector [6][30]. - New products include CFORCE 800 TOURING, CFORCE 1000 TOURING, and ZFORCE 950 Sport 4, aimed at expanding the SSV product line [7][30]. - The company is actively expanding its motorcycle product line, with new models such as 150SC, 450MT, and 500SR VOOM launched in 2024, and more planned for 2025 [9][34]. - The Jike brand is establishing a third growth curve, with rapid sales growth in the electric motorcycle market, supported by a new production base in Zhejiang [10][44]. Export Strategy - The company is focusing on expanding its motorcycle export business, aiming for long-term growth by re-entering the North American market and enhancing its product offerings [41][42]. - The motorcycle products are positioned competitively in overseas markets, with a focus on high cost-performance ratios compared to Japanese competitors [42][43].

Industry Rating - The industry investment rating is maintained as "Outperform the Market" [1] Core Viewpoints - The report highlights the expansion of product categories and consumption upgrades as key drivers for the growth of the sports brand, CFMOTO, which is moving towards a global market [3][4][5] Company Overview - CFMOTO is a leading manufacturer of both two-wheeled and four-wheeled motorcycles, with a significant focus on export business. The revenue structure for 2024 is projected to be 47.9% from four-wheeled vehicles, 40.1% from two-wheeled fuel vehicles, and 2.6% from electric vehicles [3][19] - The company has a strong international presence, with over 70% of its revenue coming from overseas markets since 2022 [3][19] All-Terrain Vehicles (ATVs) - The global ATV market has a total sales volume of approximately 1 million units, with North America accounting for over 80% of the demand. CFMOTO holds a stable market share of over 15% [4][39] - The introduction of mid-to-high-end products, such as the U10 PRO, is expected to enhance profitability due to its competitive pricing and performance [4][50] Two-Wheeled Vehicles - The report indicates a trend towards higher displacement fuel motorcycles, with the company launching several new models above 600cc. The sales volume for electric motorcycles is projected to exceed 100,000 units in 2024 [5][66] - The domestic sales of fuel motorcycles are expected to reach 1.432 million units in 2024, reflecting a year-on-year increase of 44% [66] Electric Vehicles - The electric two-wheeler segment is experiencing a shift towards smart features and emotional connections with consumers. The brand "ZEEHO" is positioned to capture this market with a focus on high performance and intelligent design [75][79] - In 2024, the domestic sales of electric two-wheelers are projected to be around 49.5 million units, while overseas sales are expected to grow by 24.8% [75][79]

Core Viewpoint - Motorcycle exports possess three rare attributes: overseas sales potential is over ten times that of the domestic market; core markets are Europe and Latin America, while the U.S. market accounts for less than 1% of global capacity; domestic brands have undergone a qualitative leap in product strength over the past five years, with overseas market share currently below 5%, expected to accelerate from 1% to 10% [1][2]. Market Analysis - The global market for 250cc+ large displacement motorcycles is approximately 3.6 million units, with the overseas market space nearly ten times that of the domestic market. Domestic brands are focusing on Europe and Latin America [2]. - The European motorcycle market has a total size of about 1.84 million units, primarily consisting of large displacement models, with a penetration rate of nearly 60% for 250cc and above. The projected sales for 250cc+ large displacement motorcycles in 2024 is around 1.08 million units, with a preference for high-end models in the 600cc to 1000cc range [2]. - The Americas motorcycle market has an overall capacity of approximately 6.88 million units, with the U.S. market around 500,000 units, primarily focusing on super large displacement models. The Latin American market capacity reaches 6.26 million units, with a projected sales volume of about 500,000 units for 250cc+ models [3]. - The Asian motorcycle market has a total capacity of about 47.55 million units, with penetration rates for 250cc+ models at 8.6% in China and 25% in Japan. The total sales for 250cc+ models in Asia is estimated at 1.34 million units [3]. Company Insights - Changan Power has successfully adopted a "premium" strategy, rapidly gaining international recognition. The company has exported products to over 100 countries, with sales increasing from 8,000 units in 2020 to 126,000 units in 2024, reflecting a CAGR of 96.99% [4]. - Longxin General has achieved rapid growth, transitioning from "product export" to "brand export." The brand has gained recognition in the European market, with 76% of export revenue coming from Europe, and sales of the Longxin DS900X exceeding 10,000 units [4]. - Qianjiang Motorcycle, a veteran in the large displacement segment, has elevated its international strategy to a top priority, focusing on markets in Europe, Latin America, the Middle East, and Africa [5].

Core Insights - The motorcycle export market presents significant opportunities, with overseas sales potential being over ten times that of the domestic market, particularly targeting Europe and Latin America, while the U.S. market accounts for less than 1% of global capacity [1][2] Group 1: Market Overview - The global market for motorcycles with engine displacement over 250cc is approximately 3.6 million units, with a substantial opportunity for Chinese brands to increase their market share from less than 5% [1] - The European motorcycle market is about 1.84 million units, with a penetration rate of nearly 60% for 250cc+ models, indicating a strong preference for high-end models in the 600cc to 1000cc range [2] - The Americas motorcycle market has a total capacity of around 6.88 million units, with the U.S. market being approximately 500,000 units, while Latin America has a capacity of 6.26 million units, showing a demand for larger displacement motorcycles [3] Group 2: Company Performance - Chunfeng Power has successfully positioned itself in the international market, with exports increasing from 0.8 thousand units in 2020 to 12.6 thousand units in 2024, achieving a CAGR of 96.99% [4] - Longxin General has transitioned from "product export" to "brand export," with significant growth in both domestic and international revenues, particularly in the European market, where it accounts for 76% of export income [5] - Qianjiang Motorcycle, a veteran in the large-displacement segment, has elevated its international strategy to a top priority, focusing on markets in Europe, Latin America, the Middle East, and Africa [5]

Core Viewpoint - The motorcycle industry is experiencing significant growth in sales, particularly in the mid-to-large displacement segment, driven by strong domestic demand and export performance [2][12]. Industry Overview - April sales for motorcycles above 125cc reached 786,000 units, a year-on-year increase of 24.2% and a month-on-month increase of 10.5%, with notable contributions from 125-150cc and 500-800cc segments [2]. - The 250cc and above segment saw sales of 93,000 units in April, up 28.0% year-on-year and 5.6% month-on-month, marking a historical high [2][3]. - Cumulative sales from January to April for 250cc and above motorcycles reached 298,000 units, reflecting a year-on-year increase of 58.3% [2]. Structural Insights - The 500cc and above displacement models are experiencing robust growth, with April sales of 7,000 units, a staggering year-on-year increase of 436.0% [5]. - The overall mid-to-large displacement motorcycle sales continue to maintain high growth rates, with strong domestic performance as the peak season approaches [3]. Competitive Landscape - The top three companies in the 250cc and above segment in April were Chunfeng Power, Qianjiang Motorcycle, and Longxin General, with a combined market share of 52.9% [4]. - Chunfeng Power's total two-wheeler sales in April reached 56,000 units, a year-on-year increase of 108.1% [4]. - Qianjiang Motorcycle's April sales were 35,000 units, down 12.4% year-on-year, while Longxin General reported sales of 145,000 units, up 9.6% year-on-year [7][11]. Future Outlook - Chunfeng Power is focusing on new models in the 450cc and 650cc categories, which are expected to drive sales growth [6]. - The export market for motorcycles is anticipated to maintain high growth rates, with significant increases in export volumes projected for 2025 [6][14]. - The mid-to-large displacement motorcycle market is expected to expand rapidly, with domestic brands likely to benefit the most from the rising demand [12].

Summary of Conference Call on Motorcycle Industry Company and Industry Involved - The conference call focused on the motorcycle industry, specifically discussing the company Chunfeng (春风). Core Points and Arguments 1. **Market Valuation and Growth Potential** Chunfeng's target market valuation for 2025 is projected to reach 39 billion, indicating a potential growth of 35% [1] 2. **High Growth Segments** - The first high growth segment is motorcycle exports, with a target of 500,000 units for the current year [2] - The second high growth segment is the company's two-wheeled electric vehicle business, which has significant long-term potential [2] 3. **Valuation Methodology** A distributed valuation method was employed, considering various segments including four-wheeled vehicles in the US, motorcycle exports, domestic sales, and electric vehicles. The estimated valuation floor is 26 billion, indicating a strong safety margin [3] 4. **Market Demand Analysis** The overseas market for motorcycles is substantial, with Europe accounting for 1.12 million units and Asia (including Southeast Asia and India) contributing approximately 1.3 million units [4] - The North American market is estimated to have around 550,000 units, while South America adds another 600,000 units [4] 5. **Export Market Characteristics** The overseas market is characterized as a pure non-US export market, with a focus on Europe and Latin America. Current market share for domestic brands in overseas markets is less than 5% [5] 6. **Product Segmentation** The overseas market for motorcycles shows that 250cc to 500cc models account for 20% of demand, while 500cc to 1000cc models represent over 50% of total demand [6] - Chunfeng's current exports primarily consist of 450cc models, which only capture 20% of the overseas market [6] 7. **Upcoming Industry Data** Industry data is expected to be released on April 15, which is anticipated to be a significant catalyst for the market [7] 8. **Electric Vehicle Business Growth** The electric vehicle segment is prioritized by the company, with a target of 500,000 units and a projected 400% year-on-year growth for 2025 [7] - Expected revenue for this segment is around 1.5 billion, translating to a market valuation of 7.5 billion [8] 9. **Impact of Tariffs** Concerns regarding tariffs on four-wheeled vehicles have been noted, but the company plans to shift production to Thailand to mitigate potential impacts [9] - The Thai facility is expected to have an annual capacity of 50,000 units and currently operates under a zero-tariff status [9] 10. **Profit Projections** For 2025, profit estimates are around 1.8 billion, with a target market valuation of 36 billion. The US four-wheeled vehicle segment is projected to contribute approximately 580 million in profit [11] 11. **Long-term Market Trends** The large displacement motorcycle market has shown consistent growth, maintaining an annual growth rate of over 30% for the past five years [14] - Current domestic demand is significantly lower than in Japan, indicating room for growth [14] 12. **Valuation Safety Margin** The safety margin for the company is considered robust, with a valuation floor of 26 billion even when excluding key segments [15] 13. **Successful Brand Expansion** The company's brand Uji has successfully penetrated the overseas market, particularly in the 800cc and above segment, capturing a significant share [16] 14. **Valuation Metrics** The overall valuation metrics indicate that the company is undervalued, with a projected market cap of 94 billion, including 6 billion in cash [17] Other Important but Overlooked Content - The discussion highlighted the competitive landscape, noting that competitors like Polaris and Bombardier also face pressure from potential tariff increases [10] - The company is expected to maintain a growth trajectory in the high displacement motorcycle segment, which is still expanding [14] - The strategic shift to Thailand for production is seen as a proactive measure to ensure continued growth despite external pressures [9]