Zhengzhou Yutong Bus Co: Risk Reward Update

Research evidence excerpt

Zhengzhou Yutong Bus Co: Risk Reward Update

UpdateM

RiskRisk RewardReward– Zhengzhou- ZhengzhouYutong Bus Co Yutong(600066.SS)Bus Co (600066.SS)

Intact global expansion thesis with decent dividend yield

PRICE TARGET Rmb36.60 EQUAL-WEIGHT THESIS

Base case, discounted cash flow model. Key assumptions include: a WACC of 12.5% (beta of ▪We regard Yutong as a high-quality

1.3, risk-free rate of 3.3%) and terminal growth of 2%. company that is well placed to deal with

industry headwinds, supported by its growth Rmb40.24

potential domestically and overseas, as well

Consensus Price Target Distribution Rmb31.30 Rmb50.00 as its strong balance sheet.

MS PT

see sustainable export growth inSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪We

2026-2028, but also some structural

changes in domestic demand.

▪Valuation seems reasonable to us and

RISK REWARD CHART reflects the company's growth potential and

dividend yield.

CNY

Rmb49.60Rmb49.60(+70.10%)Rmb49.60(+70.10%)(+70.10%) Consensus Rating Distribution

48 77% Overweight

23% Equal-weight

0% Underweight

36 Rmb36.60Rmb36.60(+25.51%)Rmb36.60(+25.51%)(+25.51%)

MS Rating

Rmb29.16Rmb29.16Rmb29.16 Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

Rmb18.60Rmb18.60(-36.21%)Rmb18.60(-36.21%)(-36.21%)

12 Electric Vehicles: Positive

Pricing Power: Positive

View descriptions of Risk Rewards Themes here

JUL '25 JAN '26 JUL '26 JUL '27

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research

BULL CASE Rmb49.60 BASE CASE Rmb36.60 BEAR CASE Rmb18.60

17.4x 2026e P/E 12.9x 2026e P/E 6.5x 2026e P/E

We assume more resilient domestic demand, We assume domestic demand is skewed Yutong could become more involved in

leading to less pricing pressure and towards buses vs.