Bank of America initiates coverage of CFMOTO with a Buy rating and an RMB332 target price

Overview

Bank of America initiates coverage of CFMOTO with a Buy rating, believing the company is transitioning from a volume-driven exporter into a powersports company with global brand influence. The report focuses on three business lines—ATVs, internal-combustion motorcycles, and E2Ws—and expects overseas expansion, product mix upgrades, and ZEEHO volume growth to drive continued earnings growth from 2025-2028E.

Core views

The core views comprise three points. First, ATVs and internal-combustion motorcycles will continue expanding in overseas markets such as North America and Europe, with overseas revenue already reaching 72% in 2025. Second, the company continues upgrading toward high-performance and premium models in categories including ATVs and motorcycles, which should improve ASP, gross margin, and ROE. Third, ZEEHO is rapidly scaling in the premium E2W market and will become a new long-term growth curve. The report also identifies foreign exchange, competition, US tariffs, and raw-material costs as key risks.

Analysis framework

The report uses an initiation-of-coverage framework, combining segment-level revenue and volume forecasts, regional expansion analysis, industry supply-demand analysis, and competitive landscape comparisons, with the target price determined using a P/E valuation method. The valuation is based on 21x 2H26-1H27E EPS, above the company's one-year forward average P/E over the past three years, justified by globalization, product premiumization, margin improvement, and ROE expansion.

Methodology notes

• Valuation methodsP/E valuation

  Deriving the target price by multiplying the target P/E multiple by forward EPS

  The report applies a 21x P/E to 2H26-1H27E EPS to derive an RMB332 target price; the multiple is above the company's one-year forward average P/E over the past three years, reflecting global expansion and ROE improvement.

• Earnings forecastsCAGR forecasting

  Using compound growth rates to measure multi-year revenue, volume, and EPS growth

  The report forecasts a 25% EPS CAGR and a 19% revenue CAGR for 2025-2028E, and separately forecasts revenue growth for ATVs, internal-combustion motorcycles, and E2Ws.

• Financial qualityROE and DuPont analysis

  Assessing earnings quality and valuation support through ROE, margins, and asset efficiency

  The report forecasts ROE to remain at 25%-27% during 2026-2028E, above 16%-18% in 2021-2022 and 22% in 2023, and believes this supports a higher valuation multiple.

Asset mapping & comparison

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

• 603129.SS / CFMOTO

  Core covered company

  Strengths

  High overseas revenue contribution, leading ATV exports, products with approximately a 20% price advantage, more than 3,100 global dealerships, and rapid ZEEHO growth.

  Weaknesses

  Some earnings forecasts are below consensus, and the company faces foreign-exchange, tariff, and competitive pressures.

  Comparison

  The report believes the company should command a valuation premium over Chinese two-wheeler peers because of stronger earnings growth, ROE prospects, and globalization capabilities; however, its valuation remains below the global two-wheeler company average.

  Risks

  Foreign-exchange losses, US tariffs, intensifying competition, and rising raw-material costs.

• ATV all-terrain vehicle business

  Largest revenue and high-margin business

  Strengths

  Contributed 49% of company revenue in 2025, with approximately 10% of global ATV revenue share and approximately 20% of global unit share, accounting for 74% of China's ATV export value.

  Weaknesses

  Global traditional ATV sales declined from their 2020 peak, while industry demand has been affected by inflation, demand pull-forward after the pandemic, and supply-chain disruptions.

  Comparison

  Competitors include international brands such as Polaris, Can-Am, Honda, and Yamaha. CFMOTO competes through price advantages, overseas production capacity, and its dealer network.

  Risks

  US tariffs, fluctuations in overseas demand, competition from international brands, and slower-than-expected product upgrades.

• Internal-combustion motorcycle business

  Second-largest revenue business

  Strengths

  Contributed 33% of company revenue in 2025, with overseas units accounting for 54% of sales and a 24.4% share of China's >200cc motorcycle market.

  Weaknesses

  Domestic Chinese demand for 250-500cc motorcycles is weak in the short term, while policy restrictions in certain cities suppress domestic demand.

  Comparison

  The company competes with Honda, Yamaha, Kawasaki, Suzuki, BMW, Ducati, Triumph, and domestic Chinese manufacturers.

  Risks

  Slowing domestic demand, competition in export markets, and slower-than-expected product mix upgrades.

• ZEEHO / E2W business

  New growth curve

  Strengths

  Sales reached 551,000 units in 2025, up 381% year over year; positioned in the RMB4-6k premium price segment, with ASP approximately 50% higher than peers.

  Weaknesses

  The business remained in the scaling and profitability ramp-up stage in 2025, with gross margin lower than those of ATVs and motorcycles.

  Comparison

  Compared with Yadea and Aima, ZEEHO emphasizes premium positioning, riding performance, fashionable design, and channel efficiency.

  Risks

  Changes in industry regulation, declining subsidies, slower-than-expected channel expansion, and intensifying price competition.

Key data

• Rating and target priceBUY; RMB332.00Initiated coverage, with the target price implying approximately 23% upside.
• Current priceCNY269.20Disclosed in the report's share price data table.
• 2025-2028E EPS CAGR25%The report's core earnings forecast.
• 2025 regional revenue mixChina 28%; Overseas 72%The company has high overseas revenue exposure, particularly in North America and Europe.
• 2025 revenue contribution by businessATV 49%; Internal-combustion motorcycles 33%; E2W 10%ATVs are the largest revenue source, while E2Ws are the fastest-growing business.
• 2025 ATV performance197k units sold; RMB9.61bn revenue; 33% year-over-year growthThe report forecasts ATV unit growth of 10%/6%/5% year over year in 2026/27/28E.
• 2025 ZEEHO performance551k units sold; 381% year-over-year growthThe report forecasts E2W sales of 1,774k units in 2028E and a premium E2W share of approximately 6%.
• Valuation multiple21x 2H26-1H27E EPSThe target P/E is above the 15x 2026E EPS average for Chinese two-wheeler peers and below the 32x average for global two-wheeler peers.

Impact & implications

If the report's thesis is realized, CFMOTO's investment case could expand from that of a single export manufacturer into a global powersports brand and premium E2W growth platform. Overseas capacity, distribution networks, and product upgrades should enhance earnings resilience, while ZEEHO's volume growth could increase the company's medium- to long-term revenue growth and valuation elasticity.

Risks

• Foreign-exchange losses could weigh on 2026-2028E EPS, which the report says is approximately 10% below consensus.
• Changes in US tariffs could affect the recovery of profitability and export competitiveness of ATVs produced in Mexico.
• Intensifying competition in ATV, motorcycle, and E2W markets could weaken ASP, gross margin, and market share.
• Rising raw-material and input costs could compress margins.
• If ZEEHO's volume growth, channel expansion, or premium E2W share gains fall short of expectations, the incremental growth thesis will weaken.
• Domestic motorcycle demand is affected by urban policy restrictions and short-term weakness in the 250-500cc segment.

What to watch

• Whether 2026-2028E EPS approaches the report's forecast 25% CAGR.
• ATV sales, ASP, gross margin, and the performance of new models such as U10 Pro, Z10, and RUV in the US and Europe.
• The extent to which production capacity in Mexico and Thailand mitigates tariff risks.
• The overseas sales mix of internal-combustion motorcycles and demand for >500cc premium models.
• Whether ZEEHO sales can increase from 551k units in 2025 to 1,774k units in 2028E and raise China's premium E2W share to 6%.
• Whether ROE can remain within the 25%-27% range during 2026-2028E.