Shenwan Hongyuan has issued a research report maintaining a "Buy" rating on ZENERGY (03677). With industry demand trending upward, the company's profitability is expected to improve as its power and energy storage battery sales scale up. Currently, new energy passenger vehicles are becoming more widespread on the power side of the lithium battery downstream market, while the energy storage sector is entering a period of rapid construction growth driven by grid parity for solar-plus-storage projects. As a leading company in the lithium battery industry, ZENERGY is not only increasing its market share but is also well-positioned to benefit significantly from its value creation through lean manufacturing. The firm has modestly raised its profit forecasts for 2025–2027, projecting net profits attributable to shareholders of RMB 7.3 billion, RMB 13.0 billion, and RMB 19.0 billion, respectively, corresponding to price-to-earnings ratios of 29, 17, and 11 times.
Key points from Shenwan Hongyuan are as follows:
ZENERGY's 2025 profit guidance exceeded expectations, with the company forecasting a net profit of RMB 6.8 to 8.2 billion, representing year-on-year growth of 647% to 801%. The substantial increase in net profit is mainly attributed to: 1) higher battery sales driving revenue growth, along with increased investment income from joint ventures; 2) improved product yield and capacity utilization through AI-driven closed-loop algorithm technology, leading to gradually emerging economies of scale; and further gross margin expansion due to continuous optimization of cost control measures; 3) significantly reduced period expense ratios as a result of refined expense management.
Technological premium and economies of scale are working in synergy, enabling the continuous release of profit elasticity. ZENERGY's passenger vehicle products cover both EVs and PHEVs, and the company has deep partnerships with key customers such as Leapmotor, SAIC, and GAC, resulting in significantly improved order visibility. Steady capacity expansion lays a solid foundation for sustained shipment growth. The company's outstanding lean manufacturing capabilities and platform-based systems cater to multi-scenario demand, while economies of scale continue to drive down unit costs. As ZENERGY expands in passenger/commercial/energy storage segments, improves capacity utilization, and diversifies its customer base, it is expected to strengthen its cost advantages and technological premium capabilities amid industry competition, continuously unlocking profit growth potential.
Dual drivers in power and energy storage sustain high growth momentum, with supply-demand optimization expected to lead a new cycle in 2026. Downstream new energy vehicle and energy storage markets remain highly active, and China's electrification process continues to deepen. According to Gaogong Lithium Battery, China's total lithium battery shipments will exceed 2.3 TWh by 2026, a year-on-year increase of approximately 30%, with energy storage lithium battery shipments surpassing 850 GWh and growth rates expected to exceed 35%. Power battery shipments are projected to exceed 1.3 TWh, with growth exceeding 20%. The lithium battery industry is entering a cycle of improving supply-demand balance, with a competitive landscape characterized by "dominance by leading players and diversified progress." According to the China Automotive Power Battery Industry Innovation Alliance, ZENERGY's domestic power battery installation volume reached 15.9 GWh in 2025, accounting for 2.1% of the market, up 0.3 percentage points year-on-year, ranking ninth. With steadily increasing market share, the company is well-positioned to leverage industry recovery and its own technological advantages to open up new space for profit improvement.
Risk warnings include a sharp rise in raw material prices, intensified industry competition leading to significant product price declines, and risks associated with overseas trade protection policies.