Bank of America initiates coverage of CFMOTO, assigning a Buy rating and a target price of RMB 332

Overview

Bank of America initiates coverage on CFMOTO and assigns a Buy rating with a target price of RMB332. The report positions the company as an emerging global powersports equipment leader, arguing it is evolving from a low-end OEM and export-driven model into a premium powersports platform with branding, channels, product performance, and global manufacturing footprint. Core growth comes from three main vectors: ATV and quad sales continue expanding in North America and Europe; fuel motorcycles move up to larger displacement, higher performance, and overseas leisure demand; and ZEEHO premium electric two-wheelers scale rapidly and improve operating leverage.

Core views

The report's key points are: first, overseas revenue already represents 72%, and North American and European channels, production in Mexico and Thailand, and roughly 20% price advantage help CFMOTO maintain growth resilience amid US tariff risk and a slower domestic demand backdrop. Second, product premiumization has improved ASP and gross margins, with ATV models U10 Pro and Z10 and the planned H2 2026 launch of RUV, plus motorcycles 675SR and 1000MT, supporting brand upgrade. Third, ZEEHO's expansion in the premium E2W segment is not yet fully reflected in valuation; sales were 551,000 in 2025 and are expected to reach 1.774 million by 2028E. Fourth, Bank of America believes CFMOTO should trade at a valuation premium versus Chinese two-wheeler peers because its 2025-2027E profit CAGR, ROE outlook, and globalization trajectory are stronger.

Analysis framework

The report combines a top-down industry demand assessment with bottom-up company segment forecasting. At the industry level, it separately analyzes global ATV, global and China motorcycles, China premium E2W market size, demand structure, competitive landscape, and regional distribution. At the company level, it splits ATV, fuel motorcycles, and E2W into three segments and forecasts unit volume, revenue, ASP, gross margins, and profit margins. On valuation, it uses a P/E approach with 21x 2H26-1H27E EPS as the target multiple and compares it with the company’s three-year forward P/E history, Chinese two-wheeler peers, and global motorcycle peers.

Methodology notes

• Valuation methodsP/E valuation

  Target price-to-earnings valuation based on forward EPS

  The RMB332 target price comes from applying a 21x P/E to 2H26-1H27E EPS. This multiple is above the company's average three-year one-year-forward P/E of 15.6x and reflects global expansion, product premiumization, margin expansion, and ROE uplift.

• growth_forecastsegment revenue and volume forecast

  Segment revenue, volume and margin forecasting

  The report separately forecasts ATV, fuel motorcycle, and E2W volumes, revenue CAGR, and gross margin changes to assess whether the company’s 2025-2028E 19% revenue CAGR and 25% EPS CAGR are sustainable.

• industry_analysismarket size and competitive landscape

  Analysis of market size, regional demand, and competitive dynamics

  The report compares volume, sales, regional demand structure, and major competitors in global ATV, motorcycles, and China premium E2W markets to assess CFMOTO’s share expansion and brand upgrade path.

• peer_comparisonrelative valuation comparison

  Peer valuation comparison

  The report compares CFMOTO with Chinese two-wheeler peers and global motorcycle peers, noting that Chinese two-wheeler peers trade around 15x 2026E EPS on average and global motorcycle peers around 32x, while CFMOTO’s higher growth and ROE outlook support a valuation premium.

Asset mapping & comparison

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

• 603129.SS / CFMOTO

  Primary covered target

  Strengths

  High overseas revenue share, ATV export leadership, over 3,100 global dealers, stronger brand-led product mix with ASP and margin improvement, and rapid ZEEHO scaling.

  Weaknesses

  2026-2028E EPS is expected to be about 10% below consensus, mainly due to FX headwinds; some domestic 250-500cc demand is temporarily weak.

  Comparison

  Compared with Chinese two-wheeler peers, the company has stronger profit growth, greater globalization, and better ROE prospects; compared with global motorcycle peers, valuation still appears lower.

  Risks

  FX losses, intensified competition, US tariffs, and rising raw material costs.

• ZEEHO

  CFMOTO's premium E2W growth brand

  Strengths

  Positioned in RMB4-6k price tier, ASP about 50% above peers, 381% year-over-year unit growth in 2025, clear channel expansion, and differentiated design-performance profile.

  Weaknesses

  Current share remains low; premium E2W share was about 2% in 2025, and profitability still depends on scale and margin expansion.

  Comparison

  Compared with Yadea and Aima, ZEEHO is positioned higher-end, emphasizing ride performance and fashionable design.

  Risks

  The Chinese E2W industry is highly competitive, and differences in new national standard and city-level implementation may affect demand pacing.

• ATV / four wheelers business

  CFMOTO's largest and highest-margin business

  Strengths

  2025 revenue RMB9.61bn, ATV share of 49% of revenue, high global share, and 74% share of China ATV exports; production in Mexico and Thailand helps reduce tariff risk.

  Weaknesses

  Global ATV sales have declined from the 2020 peak, and industry growth depends on UTV/SSV mix upgrades.

  Comparison

  Competes with global players such as Polaris, BRP, and Honda; prices are about 20% lower and it maintains long-term high share in Europe.

  Risks

  US tariff changes, North American demand volatility, and price or model disruption by competitors.

• Fuel motorcycle business

  CFMOTO's second-largest revenue business

  Strengths

  2025 revenue RMB6.47bn, product coverage from 125cc to 1250cc, overseas volume share 54%, domestic >200cc share in China 24.4%.

  Weaknesses

  Domestic mid-displacement 250-500cc demand is temporarily soft, and policy restrictions in some major cities suppress domestic commuter demand.

  Comparison

  Competes against Japanese, European, Indian, and Chinese motorcycle makers, with strength in China large-displacement and European leisure-demand categories.

  Risks

  Overseas demand volatility, pricing competition, and potential delays in product refresh cycles.

Key data

• Rating and target priceBuy；PO RMB332.00Initial coverage; current price RMB269.20, implying 23% upside.
• Valuation multiple21x 2H26-1H27E EPSThe target P/E is above the company’s three-year average one-year-forward P/E of 15.6x; the company’s three-year P/E range is about 8-23x.
• EPS CAGR25%Bank of America forecasts 2025-2028E EPS CAGR at 25%.
• Revenue CAGR19%2025-2028E revenue growth is expected to be jointly driven by E2W, quads, and fuel motorcycles.
• 2025 overseas revenue share72%China and overseas revenue shares were 28% and 72%, respectively.
• 2025 revenue mixATV 49%; fuel motorcycle 33%; E2W 10%ATV is the largest revenue contributor and has the highest gross margin; E2W is expected to be the fastest-growing segment.
• ATV market positionabout 10% global sales share; about 20% sales volume share; 74% share of China ATV exportsThe company is China's ATV export leader and is strengthening channels in North America and Europe.
• ATV forecast2026/27/28E volume CAGR +10%/+6%/+5%; gross margin 31.6%/32.3%/32.6%Growth is driven by overseas channels, product upgrades, and tariff-risk mitigation from Mexico and Thailand plants.
• Fuel motorcycle forecast2025-2028E volume CAGR 6%; revenue CAGR 12%Overseas share of volume was 54% in 2025; domestic >200cc share in China was 24.4%.
• ZEEHO units551k units in 2025; 898k/1,267k/1,774k units in 2026/27/28EYear-over-year growth was 381% in 2025; premium E2W share is expected to rise from 2% to 6% in 2028E.
• E2W revenue CAGR44%The highest growth rate in 2025-2028E, benefiting from premium positioning, channel expansion, and scale effects.
• ROE outlook25-27% in 2026-2028EHigher than 16-18% in 2021-2022 and 22% in 2023, supporting a higher valuation multiple.

Impact & implications

If the report’s assumptions play out, CFMOTO’s investment thesis expands from a single-track export manufacturer to a global brand-building and multi-segment growth platform: ATV provides high-margin and a global channel foundation, fuel motorcycles deliver a structural upgrade to larger displacement and overseas leisure demand, and ZEEHO provides a new high-growth curve. On valuation, the market may shift from a traditional two-wheeler or export manufacturing framework to a combined framework of global powersports branding and high-growth premium E2W company characteristics.

Risks

• FX losses may pressure earnings; the report notes that 2026-2028E EPS is expected to be about 10% below consensus mainly due to FX headwinds.
• Changes in US tariff policy could affect profitability and export timing for ATV production from Mexico.
• ATV, fuel motorcycles, and E2W all face rising competition, which could compress ASP, share, or margins.
• Rising input and component costs could weaken expected margin expansion.
• Domestic 250-500cc motorcycle demand remains temporarily weak, potentially slowing the fuel motorcycle upgrade path.
• E2W regulatory changes, inconsistent implementation of new national standards, and subsidy phase-outs could affect ZEEHO unit growth.

What to watch

• Whether ZEEHO monthly unit sales, channel expansion, and premium E2W share continue to move toward the 2028E 6% pathway.
• ATV volume and ASP in the US and Europe, product reception for U10 Pro, Z10, and RUV, and whether Mexico and Thailand capacity effectively cushions tariff risk.
• Whether overseas share of fuel motorcycle volume is maintained and whether demand for larger displacement models such as 675SR and 1000MT remains steady in Europe and other markets.
• Whether 2026-2028E ROE stays at 25-27% and whether net margin improves from 8.4% in 2025 to 9.9% in 2028E.
• The impact of RMB FX, US tariffs, oil prices, and raw material prices on earnings forecasts.
• Whether the company’s realized P/E moves toward the 21x target multiple, and whether valuation gaps versus Chinese two-wheeler peers and global motorcycle peers narrow.