Goldman Sachs has issued a research report initiating coverage on ZENERGY (03677) with a "Buy" rating. The bank has set a 12-month price target of HK$13.00, derived from a sum-of-the-parts valuation, implying a potential upside of 139%.

The firm forecasts that ZENERGY could become the fastest-growing company within its coverage of China's battery sector and is among the few likely to achieve a return on invested capital exceeding its weighted average cost of capital. Regarding valuation, the stock's estimated 2026 EV/EBITDA multiple is below the industry average, presenting an attractive entry point.

The report notes that the company's founding team has a background from Fuyao Glass, providing accumulated expertise in automotive parts manufacturing systems, production management, and cost control. This foundation has enabled the company to achieve a favorable balance between growth and returns.

Goldman Sachs believes ZENERGY's competitive edge stems not merely from expanding shipment volumes but from its capacity for high-quality growth. This includes a deep understanding of industry cycles, customer demands, and manufacturing systems, which translates into strengths in quality control, manufacturing stability, cost efficiency, and input-output balance.

The bank anticipates that as ZENERGY continues to diversify its customer base, its market share is poised to expand further. The cycle of energy storage system demand is expected to be a primary industry catalyst over the next two years.

Goldman Sachs projects that demand for ESS will accelerate notably in 2026-2027. However, as new supply comes online and demand growth normalizes, the sector may face some pressure post-2028. For ZENERGY, its ESS business is starting from a relatively low base, making it easier to benefit from low-base growth effects in the near term.

Furthermore, compared to companies already heavily reliant on ESS revenue, ZENERGY is seen as relatively less vulnerable to potential future supply-demand fluctuations in that segment.