EHang Intelligence: 1Q26 Earnings Under Pressure, Maintain Buy for Long Term

Overview

This report updates EHang Intelligence (EH.US) performance in 2026 Q1 and EH216-S commercialization progress. Although the company significantly missed expectations on revenue in Q1 and expanded losses leading institutions to lower short-term earnings forecasts and target prices, given that management maintained full-year revenue guidance unchanged and positive progress on regulatory fronts, Goldman Sachs maintains its "Buy" rating, believing current performance fluctuations are temporary during commercial ramp-up, and the long-term growth logic remains unchanged.

Core views

Performance Review and Short-Term Pressure: EHang Intelligence reported 26.0 million CNY revenue in Q1 2026, down 2% YoY, and sharply down 86% QoQ, missing Goldman Sachs' prior expectations by 52%. The main reason for missing expectations was significant slowdown in eVTOL deliveries; only 4 units were delivered in Q1, compared to 61 in Q4 2025 and 11 in Q1 2025. This was influenced by seasonal factors as well as the company's reassessment of revenue recognition standards. Despite this, gross margin remained at 62.5%, basically in line with expectations; however, due to increased R eXpenses from new employee recruitment and equity incentive costs, operating loss widened to 136 million CNY, with net loss reaching 128 million CNY. Commercialization Progress and Regulatory Updates: As a core highlight, EH216-S commercialization is advancing. The company has obtained an Operating Certificate (OC) and is currently closely coordinating with partners and the Civil Aviation Administration of China (CAAC) to meet new operational and safety requirements for commercial passenger flights. In May 2026, CAAC issued training requirements for remote pilots of large civil unmanned aircraft systems, providing a regulatory framework for ground personnel training. Management stated that relevant training projects are ready and awaiting bureau approval. Additionally, the company is simultaneously progressing applications for Type Certificates (TC) for the new VT-35 model. Earnings Forecast Adjustments and Outlook: Based on actual Q1 performance and changes in revenue recognition rhythm, Goldman Sachs raised the 2026 Net Loss forecast from 167 million CNY to 248 million CNY, and adjusted earnings forecasts for 2027 and 2028 downwards by 16% and 4% respectively. Meanwhile, reflecting higher R&D investment, operating expense rate assumptions were raised. Although short-term financial data is under pressure, institutions remain optimistic about future volume delivery of the EH216 model, and company management clearly maintained the 600 million CNY full-year revenue guidance for 2026, expecting subsequent revenue to gradually recover as commercialization lands.

Analysis framework

The report adopted an analysis approach combining "Short-term Performance Verification + Long-term Cash Flow Discount". On the short-term level, it quantitatively evaluated specific reasons for performance miss and impact on annual guidance by breaking down Q1 delivery volumes, revenue recognition policy changes, and expense structures. On the long-term valuation level, considering the company is in a high-growth investment period and has not yet achieved stable profitability, institutions abandoned traditional P/E valuation and turned to the DCF (Discounted Cash Flow) model to capture its long-term cash generation potential. The analytical logic emphasizes distinguishing "short-term fluctuations caused by accounting recognition" from "substantive progress in commercialization", viewing regulatory approval milestones (such as OC acquisition and issuance of pilot training regulations) as key milestones supporting long-term value, rather than relying solely on linear extrapolation of the current income statement.

Methodology notes

• Valuation MethodologyDCF Cash Flow Discount

  Two-stage DCF valuation for unprofitable high-growth companies

  For companies like EHang in early commercialization stages without stable profitability, relative valuation methods like P/E fail. The report adopts a two-stage free cash flow discount model: Stage 1 (2026-2028E) detailed forecast of cash flows driven by capacity ramp-up and order delivery; Stage 2 (2029-2031E) assumes entry into stable growth phase (10% growth). This method focuses more on the enterprise's cash creation ability over its lifecycle rather than short-term accounting profits, better reflecting intrinsic value of emerging tech enterprises.

• Industry/Industrial Analysis FrameworkPenetration S-curve

  Non-linear characteristics of eVTOL commercialization introduction phase

  When analyzing the sharp drop in Q1 deliveries, the report did not simply view it as demand collapse, but understood it within the early stage of a new transport tool commercialization S-curve. In this stage, non-market factors such as regulatory approvals and safety standard setting often have greater impact on delivery rhythm than market demand itself, leading to pulse-like rather than linear growth in performance. Understanding this industry common sense helps investors correctly view the divergence between short-term performance fluctuations and long-term trends.

• Quantitative/Factor/Portfolio TheoryBeta/alpha analysis

  Application of High Beta Coefficient in WACC Calculation

  The report used a high Beta value of 1.88 when calculating Weighted Average Cost of Capital (WACC). Beta measures individual stock volatility relative to the market; 1.88 means theoretical volatility of this stock approaches double that of the broader market. For frontier tracks like eVTOL, high Beta reflects extremely high uncertainty and risk premium, directly leading to increased discount rates (15.2% equity cost), thereby depressing valuation. This is an intuitive reflection of quantitative risk in pricing.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• EHang Intelligence (EH.US)

  Core coverage subject, benefits from eVTOL commercialization landing

  Strengths

  EH216-S has obtained Operating Certificate, commercialization progress leads; Management maintained full-year revenue guidance; Gross margin stable (62.5%)

  Weaknesses

  Large short-term delivery fluctuations; Continuous high R&D expenditure leads to expanded losses; Lengthened revenue recognition cycle

  Comparison

  -

  Risks

  Regulatory approval progress misses expectations; Customer adoption willingness weaker than expected; New entrants intensify competition

Key data

• 1Q26 Revenue26.0 million CNYDown 2% YoY, down 86% QoQ, missing Goldman Sachs expectations by 52%
• 1Q26 eVTOL Deliveries4 units61 units in Q4 2025, 11 units in Q1 2025
• 2026E Revenue Guidance600 million CNYManagement maintained full-year guidance unchanged
• 2026E Net Loss Forecast248 million CNYPrior forecast was loss of 167 million CNY
• 12-Month Target Price$16.90Previously USD 19.60, reduced based on DCF valuation
• WACC Assumption12%Equity Cost 15.2% (Beta 1.88), Debt Cost 3.0%

Impact & implications

The report believes that although short-term financial data is weak, EHang Intelligence is in a critical window period crossing from "Certification" to "Scaled Commercial Operations". The clarification of EH216-S commercial passenger flight requirements and landing of training systems marks the perfection of operational infrastructure, which is a necessary prerequisite for future orders converting to actual revenue. For the market, current stock price pullback may reflect excessive emotional reaction more than fundamentals; if subsequent commercial operations start smoothly and full-year revenue guidance is fulfilled, there is significant valuation repair space. At the same time, prudent adjustment of revenue recognition policies suppresses current statements but reduces future compliance risks.

Risks

• China AAV airworthiness related regulations and rules progress slower than expected
• Customer adoption willingness for manned-level AAV and Air Traffic Services weaker than expected
• Fulfillment speed of AAV pre-order bookings slower than expected
• Expansion speed of sightseeing tours and other operational services slower than expected
• More competitors entering AAV market may pose downside risk to earnings forecast

What to watch

• Specific launch time and frequency of EH216-S commercial passenger flight service
• Official approval progress of CAAC for remote pilot training programs
• eVTOL delivery volume and revenue recognition rhythm for remaining quarters in 2026
• Substantial progress of VT-35 Type Certificate (TC) application