ZENERGY (03677) achieved positive net profit attributable to shareholders and operating profit in 2024 and the first half of 2025, marking an inflection point in profitability. Revenue for 2025, 2026, and 2027 is projected at RMB 8.028 billion, RMB 12.805 billion, and RMB 18.215 billion, respectively, with net profits of RMB 544 million, RMB 1.237 billion, and RMB 1.730 billion. The corresponding P/E ratios stand at 38x, 17x, and 12x, with 2026 and 2027 valuations below industry averages. Given the company's strong profit growth and shipment expansion outpacing the sector, CITIC Securities initiates coverage with a "Buy" rating.

**Key Highlights:** - **Performance:** In 2024, ZENERGY reported total revenue of RMB 4.16 billion (+10.8% YoY) and turned profitable with net profit of RMB 90 million. For H1 2025, revenue surged 71.9% YoY to RMB 3.17 billion, with net profit reaching RMB 220 million. Operating profit for H1 2025 was RMB 87.3 million, marking its first positive result.

- **Shipments:** Benefiting from new customer orders, H1 2025 shipments grew 99.2% YoY to 7.82GWh, raising market share from 0.03% in 2022 to 2%. Full-year 2025 and 2026 shipments are forecast at 18.89GWh (+59% YoY) and 30.04GWh (+59% YoY), significantly exceeding the projected 17% global EV sales growth for 2026.

- **Capacity Utilization:** Utilization rates are expected to rise to 76.2% in 2025, reaching full capacity during peak seasons. Additional capacities of 10GWh and 15GWh will be added in 2026 and 2027 to meet new orders.

- **Profitability Drivers:** Economies of scale and higher utilization rates are key to improving unit profitability. With R&D and administrative costs per unit declining and further depreciation reductions anticipated, profit margins are set to expand.

- **Second Growth Curve:** As the first Chinese power battery firm to secure both AS9100D aerospace certification and CAAC airworthiness approval, ZENERGY has begun mass-producing high-energy-density aviation batteries. These premium-margin products, targeting fixed-wing electric aircraft, could become a significant profit driver.