Investment Rating - The investment rating for the company is "Buy" with a maintained rating for the next six months [4]. Core Views - The company is progressing in commercialization, with the new model VT35 expected to be launched in September. The second quarter of 2025 saw revenue of 150 million yuan, a year-on-year increase of 44.2%, and an adjusted net profit of 9.4 million yuan, up 719.9% year-on-year [1][2]. - The company has delivered 68 units of the EH216 series to 13 enterprise customers in China and Japan, with over 150 new orders received in the second quarter, indicating enhanced market penetration [2]. - The company is focusing on expanding its global footprint, having completed flights in Mexico, Indonesia, and the Dominican Republic, bringing its operational reach to 20 countries [3]. Business Progress - The company has initiated commercial trial operations for the EH216-S in Guangzhou and Hefei, following the acquisition of OC certification, laying the groundwork for public commercial services expected to launch within the year [2]. - Strategic partnerships have been established, including collaboration with Guoxuan High-Tech for high-energy density battery systems and with Minth Group for lightweight fuselage structures and smart cockpit solutions [2]. - The company has adjusted its revenue guidance for 2025 to approximately 500 million yuan, reflecting a strategic focus on eVTOL commercialization and operational demonstration models [3]. Future Outlook - Revenue projections for 2025-2027 are set at 500 million, 750 million, and 1.35 billion yuan respectively, with a focus on the delivery rhythm and commercialization efforts [3].

Core Viewpoint - In Q2 2025, EHang Intelligent achieved revenue of 147 million yuan, representing a year-on-year increase of 44% [2][3][10]. Financial Performance - In Q2 2025, the total revenue was 147 million yuan, up 44.2% year-on-year and 464.0% quarter-on-quarter. The net profit attributable to shareholders was -80.79 million yuan, compared to -71.54 million yuan in the same period last year [3][11]. - The adjusted net profit (excluding stock incentive expenses) for Q2 2025 was 9.65 million yuan, compared to 1.25 million yuan in the same period last year [3][11]. - The gross margin for Q2 2025 was 62.6%, with a year-on-year increase of 0.2 percentage points and a quarter-on-quarter increase of 0.1 percentage points [5][21]. Operational Milestones - EHang received the first batch of operational certificates (OC) for manned civil unmanned aerial vehicles from the Civil Aviation Administration of China (CAAC) on March 28, 2025, marking the official start of commercial operations in the low-altitude economy [6][34]. - The company has over 1,300 new purchase orders and pre-orders from Q3 2023 to June 2025, with more than 150 new orders for the EH216 series received in Q2 2025 [7][26]. Product Development and Market Expansion - EHang's EH216 series aircraft delivered 68 units in Q2 2025, representing a year-on-year increase of 38.8% and a quarter-on-quarter increase of 518.2% [3][11]. - The company has expanded its global flight operations to 21 countries, with successful test flights in Mexico, Indonesia, the Dominican Republic, and Africa [31][32]. Strategic Partnerships - EHang announced a strategic partnership with Guoxuan High-Tech in June 2025 to enhance the power system of the EH216 series [45]. - In July 2025, EHang entered into a strategic cooperation with Minth Group to develop high-safety fuselage systems for eVTOL aircraft [46]. Future Product Development - The next-generation VT35 eVTOL is undergoing internal testing and is expected to be officially launched in September 2025. The project will be supported by a total investment of approximately 1 billion yuan [49][50].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $20, corresponding to a 20x P/S for 2025 [4][6]. Core Insights - The company has lowered its full-year revenue guidance for 2025 from 900 million RMB to approximately 500 million RMB, reflecting a year-on-year growth of about 10% [1]. - In Q2 2025, the company delivered 68 units of the EH216 series aircraft, a significant increase compared to previous quarters, with a total of 79 units delivered in the first half of the year [1]. - The company achieved a revenue of 147 million RMB in Q2, representing a 44% year-on-year increase, with a gross margin of 62.6% [1]. - The company has received over 150 new orders for the EH216 series in Q2, with 90% of these being domestic orders [3]. - The company is actively pursuing the commercial launch of the EH216-S for passenger operations within the year and plans to unveil the VT35 model in September [2]. Financial Summary - The company expects revenues of 500 million RMB in 2025, with projections of 750 million RMB in 2026 and 1.34 billion RMB in 2027 [4]. - Non-GAAP net profit is projected to be 5 million RMB in 2025, increasing to 54 million RMB in 2026 and 167 million RMB in 2027 [4]. - The company has a capital expenditure guidance of approximately $40 million for 2025, with capacity expansion goals remaining unchanged [1]. Operational Developments - The company has obtained all necessary certifications for eVTOL manufacturing and is conducting trial operations for passenger drones [2]. - Strategic partnerships have been established with battery manufacturers to address battery life and charging issues, including the development of solid-state batteries [3].

Core Insights - EHang is establishing a commercial empire in the eVTOL industry with over 1,000 aircraft orders and a production facility capable of manufacturing 1,000 units annually [1] - The company is transitioning from a manufacturer to a comprehensive Urban Air Mobility platform operator, focusing on execution and scaling commercial operations after securing air operator certificates [2][3] - EHang's cost advantage stems from its multi-rotor aircraft requiring minimal infrastructure compared to competitors, with a competitive price of approximately RMB 2.39 million (around $334,000) [4] Production and Expansion - The Yunfu plant is ready to deliver 1,000 units by year-end, with additional facilities in Beijing, Hefei, and Weihai under development [3] - EHang is expanding its international operations to over 20 countries, indicating a strong global reach [3] Strategic Focus - The company is betting on an autonomy-first model to reduce costs on hardware and operations, positioning itself ahead of competitors in the market [5]

Core Insights - EHang Holdings Ltd is pioneering in the eVTOL industry by focusing on autonomous flight, bypassing traditional pilot training and regulatory challenges faced by U.S. competitors [1][3][5] - The company operates in over 20 countries and offers a range of aircraft for various applications, positioning itself as a leader in urban air mobility [2][4] - EHang's flagship model, the EH216-S, is priced at RMB 2.39 million (approximately $328,000), significantly lower than competitors' multimillion-dollar models, allowing for quicker deployment in urban settings [3][4] Company Strategy - EHang is currently conducting sightseeing flights in China and testing logistics routes with its VT20, while also working on airworthiness certification for its VT35 model aimed at intercity travel [4] - The company emphasizes a different operational model compared to U.S. rivals, focusing on urban tourism and scalable city operations rather than large tilt-rotor designs that require extensive infrastructure [5][6] - By eliminating the cockpit, EHang has addressed a major scalability barrier, potentially establishing a competitive advantage that may be hard for rivals to overcome [6]

Core Insights - EHang Holdings Ltd has established itself as a leader in the global eVTOL market, being the first company authorized to operate autonomous air taxis commercially, while competitors like Joby Aviation and Archer Aviation are still facing certification challenges [1][6] - The company has received three key approvals from the CAAC, which are essential for its early market lead, and is now expanding its services into tourism and emergency response [2] - EHang's operational experience and successful flights are expected to create a compounding advantage that will be difficult for competitors to replicate [3] Competitive Positioning - EHang is not directly competing with Joby or Archer, as it focuses on smaller, urban-friendly aircraft like the EH216-S, which is designed for dense city environments [4] - The pricing of EHang's aircraft at approximately $334K per unit is significantly lower than the tens of millions required for larger aircraft, allowing the company to address different market challenges [5] - With its certifications in place and a focus on urban air mobility, EHang is poised to dominate the market while its competitors are still working through regulatory hurdles [6]

Summary of EHang Holdings Ltd Conference Call Company Overview - **Company**: EHang Holdings Ltd - **Industry**: eVTOL (Electric Vertical Takeoff and Landing) sector - **Market Cap**: Rmb8,547 million - **Current Stock Price**: US$17.79 (as of August 25, 2025) - **Price Target**: US$26.00, indicating a 46% upside potential Key Financial Highlights - **1H25 Revenue**: Rmb173 million, a 6% year-over-year increase, representing approximately 35% of the revised full-year guidance of Rmb500 million, down from Rmb900 million [7][5] - **2Q25 Gross Margin**: Expanded by 0.2 percentage points year-over-year and quarter-over-quarter to 62.6%, attributed to better scale and lower procurement costs [2] - **2Q25 Net Loss**: Increased to Rmb81 million from Rmb78 million in 1Q25, with management targeting breakeven on a quarterly basis by 2026 and full-year breakeven by 2027 [3] Strategic Outlook - **2H25 Expectations**: Management is optimistic about a stronger second half of 2025, supported by over 150 units of EH216 orders secured in 2Q25, with 10% of these orders coming from overseas markets, particularly Japan and Thailand [1] - **Operational Efficiency**: The company aims to limit operating expense growth to less than 30% in 2025, down from a previous target of 40%, indicating a focus on operational leverage in the latter half of the year [2] Upcoming Catalysts - **Product Launches**: Anticipated unveiling of the VT35 in September and the launch of EH216 public commercial operations [3] - **Regulatory Approvals**: Potential for operational approvals or project wins that could enhance market position [3] Risks and Challenges - **Revenue Target Adjustment**: The reduction of the FY25 revenue target reflects a strategic pivot towards prioritizing safety and service over aggressive short-term expansion [7] - **Market Acceptance**: Risks include potential delays or cancellations in EH216-S shipments and slower market acceptance due to headline risks [9] Valuation and Investment Considerations - **Valuation Methodology**: The base case valuation is derived from a discounted cash flow (DCF) methodology, with key assumptions including a 15.1% WACC and a 2.5% terminal growth rate [8][9] - **Investment Rating**: The stock is rated as "Overweight," suggesting expected performance to exceed the average total return of the industry over the next 12-18 months [5][24] Conclusion EHang Holdings Ltd is navigating a challenging yet promising landscape in the eVTOL sector, with a focus on operational efficiency and strategic product launches. The company is positioned for potential growth in the second half of 2025, despite recent adjustments to revenue targets and ongoing market risks.

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were RMB 147.2 million, representing a 44% year-over-year increase and a significant sequential increase of 4.6 times compared to Q1 2025, primarily driven by increased sales volume of EH216 series products [34][6][33] - Gross profit for Q2 was RMB 92 million, showing both year-over-year and sequential growth [34] - Gross margin in Q2 was 62.6%, stable compared to 62.4% in both Q2 2024 and Q1 2025, indicating sustained market competitiveness [35] - Adjusted net income was RMB 9.4 million, a 19.9% increase from RMB 1.2 million in 2024, marking a turnaround from an adjusted net loss of RMB 31.1 million in Q1 2025 [36] Business Line Data and Key Metrics Changes - The company successfully delivered 68 units of the EH216 series, generating total revenues of RMB 147 million, reflecting strong market demand [6] - New orders for over 150 units of the EH216 series were received in Q2, indicating robust market interest and confidence in the products [6][18] - The EH216 S completed over 10,000 safe flights without incidents, underscoring its safety and reliability [6] Market Data and Key Metrics Changes - The company delivered aircraft to 13 enterprise clients across various regions in China and one international client in Japan, expanding its customer base [17] - 90% of the new orders were from domestic clients, while 10% were from overseas customers, indicating a growing demand for pilotless vehicles in international markets [52] Company Strategy and Development Direction - The company is focusing on establishing a proven scalable business model for pilotless eVTOL operations, emphasizing safety, regulatory compliance, and innovation as cornerstones for leadership in the market [16] - A strategic partnership with the Hefei municipal government was signed to establish a VT35 series product hub, integrating R&D, manufacturing, and operations [12] - The company is committed to collaborating with leading academic institutions to advance critical technologies in the low altitude economy [13] Management's Comments on Operating Environment and Future Outlook - Management emphasized that the adjustment in revenue guidance is not due to weak demand but a commitment to safety and sustainable operations [45][24] - The company is confident in achieving the full-year revenue target of RMB 500 million based on the current order backlog [46] - Management highlighted the importance of supporting existing customers to ensure safe and orderly commercial operations [15] Other Important Information - The company raised over USD 23 million through an at-the-market offering, which will be used for R&D, team expansion, and commercial operations [37] - The company is pursuing type certification in Brazil and a special flight permit in Chile, indicating ongoing international expansion efforts [31] Q&A Session Summary Question: Reasons behind the revenue guidance cuts - Management clarified that the adjustment is due to a strategic focus on providing support services to existing clients and maintaining safety as a core principle, not due to insufficient market demand [45] Question: Update on operating certificates (OC) for clients - Management provided an update on the phased operational approach of the two operators who obtained OCs, emphasizing the strong interest from existing and potential customers [47][48] Question: Breakdown of order backlog - Management indicated that 90% of the new orders are from domestic clients and 10% from overseas customers, with significant demand noted from international markets [52][53] Question: Plans for the VT20 model and airworthiness certification - Management confirmed that the VT20 series logistic aircraft does not require airworthiness certification, while larger models are in the process of certification [56] Question: Production capacity and CapEx plans - Management stated that the annual production capacity of 1,000 units will continue as planned, with CapEx for 2025 remaining unchanged at USD 14 million [69] Question: Business model as a UAV service provider - Management explained that the company will act as both an eVTOL producer and an operation service provider, focusing on sustainable long-term commercial operations [72] Question: Support from Hefei government for VT35 - Management detailed that the support from the Hefei government includes orders, investments, and supply chain support, which will aid in the development of the VT35 model [76]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were RMB 147.2 million, representing a 44% year-over-year increase and a significant sequential increase of 4.6 times compared to Q1 2025, primarily driven by increased sales volume of EH216 series products [7][35] - Gross profit for Q2 was RMB 92 million, with a gross margin of 62.6%, remaining stable compared to 62.4% in both Q2 2024 and Q1 2025, indicating sustained market competitiveness [35][36] - Adjusted net income was RMB 9.4 million, a 19.9% increase from RMB 1.2 million in 2024, marking a turnaround from an adjusted net loss of RMB 31.1 million in Q1 2025 [37][38] Business Line Data and Key Metrics Changes - The company successfully delivered 68 units of the EH216 series, with new orders exceeding 150 units for the EH216 series in Q2, reflecting strong market interest [7][20] - The EH216 S completed over 10,000 safe flights without incidents, underscoring its safety and reliability, which is crucial for scaling up commercial operations [8][21] Market Data and Key Metrics Changes - The company reported that 90% of new orders were from domestic clients, while 10% were from overseas customers, indicating a growing demand for pilotless vehicles in international markets [52][80] - The company has expanded its global presence, completing demo flights in 20 countries, including Mexico, Indonesia, and the Dominican Republic [30] Company Strategy and Development Direction - The company is focusing on establishing a proven scalable business model for pilotless eVTOL operations, emphasizing safety, regulatory compliance, and innovation as cornerstones for leadership in the market [18][34] - A strategic partnership with the Hefei municipal government aims to establish a VT35 series product hub, integrating R&D, manufacturing, and operations [13][76] - The company is pursuing a dual-engine revenue model combining vehicle manufacturing and operational services to support long-term sustainable growth [39][40] Management Comments on Operating Environment and Future Outlook - Management emphasized that the adjustment in revenue guidance is not due to weak demand but a commitment to safety and a more prudent development strategy [45][46] - The company is confident in achieving a full-year revenue target of RMB 500 million based on current order backlog [45] Other Important Information - The company has established partnerships with leading academic institutions and top-tier ecosystem allies to advance critical technologies and enhance operational capabilities [14][28] - The company is actively pursuing airworthiness certification for new models and solid-state battery technology, which has shown significant results in extending flight durations [84] Q&A Session Summary Question: Reasons behind revenue guidance cuts - Management clarified that the adjustment is due to a strategic shift towards supporting existing clients in establishing regular operations, prioritizing safety over rapid expansion [45] Question: Update on operating certificates (OC) for clients - Management provided an update on the phased operational approach of the two operators who obtained OCs, highlighting their focus on optimizing processes and services [47][48] Question: Breakdown of order backlog - Management indicated that 90% of the 150 new orders are from domestic clients, with a growing trend of demand from overseas markets [52][54] Question: Plans for VT20 model airworthiness certification - Management confirmed that the VT20 series logistic aircraft does not require airworthiness certification, while larger models are progressing towards certification [56] Question: Future revenue growth expectations - Management expressed confidence in achieving significant revenue growth next year, supported by ongoing projects and commercial operations [61] Question: Production capacity expansion plans - Management confirmed that the production base expansion plan remains unchanged, with an annual capacity target of 1,000 units [68][69] Question: Business model as a UAV service provider - Management outlined the company's role as both an eVTOL producer and an operational service provider, focusing on sustainable long-term commercial operations [73][74]

Core Viewpoint - EHang Holdings Ltd is positioned to lead the emerging eVTOL market, outpacing U.S. competitors Joby Aviation and Archer Aviation, with a strong first-mover advantage and profitability prospects [1][2]. Group 1: Company Performance - EHang is already profitable and is expected to capitalize on a projected $100 billion global eVTOL market by 2040 [2]. - The company has achieved breakeven in non-GAAP net profit in 2024, with a forecasted growth rate of 307% CAGR through 2027, reaching approximately 319 million RMB ($44.5 million) [4]. - EHang has a backlog of over 1,000 units, indicating strong demand and potential for future revenue [5]. Group 2: Competitive Landscape - EHang has secured all necessary CAAC certifications in China, giving it a significant edge over competitors who are one to four years behind in commercial readiness [3][7]. - Joby and Archer are rated Underweight and Neutral by JPMorgan, respectively, highlighting their struggles in comparison to EHang [4][7]. Group 3: Future Prospects - EHang plans to ramp up production to 300-800 units annually by 2025-2027, indicating a strong growth trajectory [3]. - Near-term catalysts include expanding flight licenses across China and the launch of the VT35 in Q3 2025 [5].