Electric two-wheeler industry research

Yadi Holdings completed the 100% acquisition of Nandu Huayu's equity in two phases in December 2021 and August 2022, and Yadi Holdings has been one of Nandu Huayu's largest customers, accounting for no less than 47.0% of Nandu Huayu's revenue for the six months ended 30 June 2021. After the acquisition, Yadi Holdings will be able to fully control the graphene battery production technology, and the acquisition is expected to help maintain Yadi Holdings' leading position in the production and development of electric two-wheelers, stabilize Yadi Holdings' supply chain and enable Yadi Holdings to expand its supply capacity.

In 2022, Yadi Holdings disclosed that it had achieved a revenue of 342 million yuan and a gross profit of 177 million yuan through the battery export business, which realized the integration of the battery link and will become a new profit growth point in the future.

Battery iteration: The cost of sodium-ion battery material is 3-4 percent lower than lithium, and the cost of kilowatt-hour electricity is lower than lithium and lead acid

Compared with lithium-ion batteries, the positive electrode materials, negative electrode materials and fluid collectors have cost advantages. Combining positive electrode materials, negative electrode materials and fluid collectors, the cost of sodium-ion battery materials is about 370 yuan /(kWh), and with the maturity of the industrial chain, the material cost is expected to further decline, combined with the cost of structural parts and electrical parts, the initial capacity investment is expected to be controlled at 500 ~ 700 yuan /(kWh);

4. Company benchmark: Better cash flow and turnover efficiency

The net interest rate was maintained at 4-5% for a long time, and the net interest rate of 2022H1 Emma Technology rose to 7.3%

Yadi Holding's gross profit margin is about 2-4pcts ahead of Emma Technology. In recent years, the gross profit margin of Yadi Holdings is about 2-4pcts higher than that of Emma Technology in the same period; The prospectus of Emma Technology explains that the company does not directly bear the logistics and transportation costs of dealers, but subsidize dealers through price discounts and correspondingly reduce the ex-factory prices of products.

The net interest rate of the industry has been at a low level for a long time, and 2022H1 has been rapidly improved. The first tier of Yadi Holdings and Emma Technology in 2018-2021 net interest rates of about 4-5%, the two are comparable (Yadi has advantages in gross profit, but Emma marketing rates and research and development rates are lower). 2022H1 benefited from the industry boom, and Emma Technology's net profit margin increased to 7.3%, higher than Yadi Holdings' 6.4%. Looking to the future, as the capacity of small car enterprises continues to clear, the price war is reduced, high-quality products deserve higher prices, and the net interest rate of Yadi Holding/Emma Technology is expected to increase and maintain at 8-10% in the long run.

The net cash ratio is maintained at about 2 for a long time, the cash income ratio is 1.1, higher than that of household appliances, and the cash flow management ability is strong

Net cash ratio = net operating cash flow/net profit, reflecting the quality of cash flow obtained from the company's operating activities. The net cash ratio can remain about 1 for a long time, reflecting the high ability of net profit to be converted into cash flow. Midea Group, a leading enterprise in the home appliance industry, has maintained a level of 1.0-1.5 in recent years, and Gree Electric Appliances has a range of 0.7-1.1 (falling to 0.08 in 2021), and the quality of cash flow is high.

Due to the business model, the net cash ratio of the upstream supplier's accounts payable for nearly half a year (including bills) and the downstream dealer's first payment and then the goods is often more than 2, reflecting the strong position in the industrial chain, good operating ability and high operating cash flow quality.

The net operating cycle of electric two-wheeler taps is better than that of white electric taps, and the turnover of accounts payable is about half a year

Net operating period = inventory turnover days + accounts receivable turnover days - accounts payable turnover days; Yadi/Emma net business cycle (Yadi's accounts payable turnover days include bills, caliber difference) is negative, significantly lower than Midea/Gree, reflecting the short net business cycle of leading two-wheel vehicle enterprises and good use of funds.

Net business cycle disassembly, from the perspective of inventory turnover days, downstream accounts receivable, Yadi, Emma is lower; The biggest difference is that the upstream supply chain accounts payable, the industry generally reaches 1.5-2 months, Yadi accounts payable caliber including bills, up to 6 months.

5. Investment analysis

Yadi Holdings

China's electric two-wheeler leading the development of the industry. After the listing of Yadi Holding sales to maintain the first in the country, in 2022, the company acquired upstream battery manufacturer Nandu Huayu to strengthen the core parts self-supply capacity, overseas placement success began to force overseas expansion, the future will fully benefit from the improvement of domestic competition pattern and the sea of electric two-wheeled vehicles.