1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Securities(Taiwan)Corporation Limited View HSBC Global Investment Research at:https:/ Find out moreHSBC

2、12th Annual China ConferenceShenzhen|1-2 September 2025 Bike vendors are still offering deep discounts to clear out older inventory;good for consumers,but means margin headwinds Demand outlook mixed across regions:steady in Europe,cloudy in the US,and still weakening in mainland China Maintain Hold

3、ratings on Giant(TP to TWD121 from TWD112)and Merida(TP to TWD126 from TWD112)Pedals still stuck:Despite patchy signs of recovery,we see a murky near-term outlook for the Taiwan bicycle sector given sustained pricing pressure and fragile demand in key markets.Geographically,Europe remains stable on

4、high-end road and e-bikes demand,while the US outlook is clouded by high import tariffs on major sourcing hubs Cambodia(19%),Vietnam(20%,Taiwan(20%)and mainland China(30%).The mainland China market continues to worsen,reflecting deteriorating consumer demand.Moreover,industry profitability remains u

5、nder pressure from continuing heavy discounting of older inventory,with competition intensifying as more Chinese manufacturers expand globally(see:Disruption from China,28 June 2025).Giant:Net income reached TWD190m(EPS of TWD0.48)down 48%QoQ and 84%YoY,missing expectations by 56-73%.Sales fell 26%Y

6、oY due to mainland China sales slump,despite a 30%recovery in OEM sales.Op margin sank to 2.8%given operating deleveraging and weaker sales mix as high-margin OBM sales weighting fell to 66%vs 77%in 1H24.Giant said its inventory days have fallen to 183 vs a peak of 261.However,we note this is still