China Two-Wheeler Sector: 1H26 industry data wrap-up: better visibility into peak season

Research evidence excerpt

China Two-Wheeler Sector: 1H26 industry data wrap-up: better visibility into peak season

eding expectations. For the two-

wheeler sector, downside risks include: 1) a shift in transport preference back to buses and

subways from electric two-wheelers, causing industry sales volume to decline; 2) the industry

landscape deteriorating with fierce price competition, with an influx of small- and medium-

sized firms. Upside risks include: 1) severe congestion in Chinese cities driving a further rise in

adoption of electric two-wheelers; and 2) industry consolidation accelerating, with small- and

medium-sized firms rapidly exiting the market and leaders continuing to gain market share.

CFMoto: Our price target is based on a PE methodology. For the large-displacement

motorcycle industry, upside risks include: 1) loosening of motorcycle bans/restrictions in

Chinese cities, leading to higher-than-expected penetration of large-displacement

motorcycles in the country and faster demand growth; and 2) declines in raw material costs.

Downside industry risks include: 1) less-than-expected loosening of motorcycle bans/

restrictions policies in Chinese cities, leading to lower-than-expected penetration of large-

displacement motorcycles in the country and slower demand growth; and 2) pressure from

rising raw material costs. Company-specific downside risks include: 1) slower-than-expected

rollouts and market acceptance of the company’s large-displacement motorcycles, affecting

its motorcycle sales volumes and ASPs; 2) failure to obtain export tariff exemptions for its four-

wheeler products, weighing on its export volume and margins; and 3) frequent product safety

incidents dampening product sales. Company-specific upside risks include: 1) higher-than-