China's auto market is flattening, although EVs are stealing the show.

Get this: total vehicle sales hit 34.4 million units in 2025, up 9.4% y/y in China, having remained above 30 million units for three consecutive years. However, the real story now is electrification.

New energy vehicles (NEVs) crushed it with 16.5 million units sold in 2025, i.e. a 28.2% jump y/y. Next year, they are on the way to hit 19 million units, locking down about 54.7% of the entire market. In contrast, total vehicle sales are only expected to inch up around 1% in 2026.

Exports have become a major second engine. China shipped out 7.1 million vehicles in 2025 (up 21.1% y/y) and is expected to touch 7.4 million by 2026 year-end.

Yadea sits right in the middle of the EV market that is still surfing on the EV wave, although it can't completely outrun the broader slowdown. Across the industry, total vehicle demand in China is flattening at 34m-to-35m units.

With overall growth stalling at 1% for 2026, the game is shifting from easy expansion to brutal competition. Yadea has the tech shift on its side, although the market is getting tighter, more competitive, and much tougher on pricing. Yadea’s latest earnings prove they are currently running their own race.

Profit overdrive

The motorcycle manufacturer’s FY 25 numbers look strong at first sight, although it tells a story that goes beyond just selling more electric scooters. Revenue scaled 31% y/y to CNY 37bn ($5.44bn) from CNY 28.2bn. Profit grew much faster, with net income up 128.8% y/y to CNY 2.9bn from CNY 1.3bn.

That gap between revenue growth and profit growth is the key. The company wasn’t just selling more units, it was making more money per unit. You can see that clearly in gross profit, which rose to CNY 7.1bn, up 65% y/y, from CNY 4.3bn.

Management says the bigger profits came from selling pricier, premium gear and upgrading their lineup through branding and R&D - not from cutting corners.

The balance sheet grew alongside the business, although leverage crept in. Assets rose to CNY 30bn from CNY 24.6bn. Liabilities increased to CNY 19.5bn from CNY 15.9bn. The company's cash balance fell to CNY 6bn from CNY 7.9bn, down 23.9% y/y.

The important takeaway is this: FY 25 was a year in which Yadea upgraded the economics of its business.

Valuation meets reality

The stock is trading at CNY 11.8, down 10.1% over the past year, which tells you the market hasn't bought the FY 25 earnings story. The stock is below the 52-week high of CNY 13.1, which suggests either the rally already happened and faded, or investors are waiting for proof that the 129% net profit jump wasn't a fluke.

A 2026e P/E of 9.7x is little over half the 3-year historical average of 17.9x, which means that the market has effectively halved the multiple it’s willing to pay.

All 13 analysts are buyers of the stock though, with an average target of CNY 15.2, implying 46.3% upside potential at present. That kind of consensus usually says more about analysts' optimism than about risk being understood. However, the market stands divided.

Expected yields of 5% in FY 26 rising to 6.3% by FY 28 are decent, although not enough on their own to explain why the stock should rerate sharply.

Peak or plateau

Yadea's biggest risk is whether its FY 25 performance is sustainable. When you double profits in a year through vertical integration and product mix tweaks, replicating that proves to be difficult.

Raw materials account for most costs, so even small price increases flow quickly into earning. The international story adds another layer. Sales now span 100+ countries, which diversifies demand on paper but replaces it with exposure to tariffs, regulatory shifts and FX swings.

The next phase is less about whether Yadea can grow, and more about whether it chooses to use that cash to compound returns.