ZENERGY recently announced its intention to issue 45.92 million new H shares at a placement price of HK$10.98 per share, aiming to raise approximately HK$500 million. The proceeds will be used for the construction of a new production facility, a pilot line for all-solid-state batteries, research and development activities, as well as general working capital.

Back in April of this year, the company raised around HK$1 billion through its Hong Kong IPO, primarily for capacity expansion and research. Now, just six months later, ZENERGY is seeking additional funding to support further expansion.

The surge in financing is indicative of ZENERGY’s ongoing cash flow challenges. Since 2022, despite multiple financing rounds, the company has seen a significant rise in interest-bearing debt, particularly short-term loans, which has outpaced any growth in cash, leading to increasing debt pressure.

Although ZENERGY has seen growth in lithium battery shipments, market share, and overall performance in recent years, the rate of accounts receivable growth has been even more pronounced, with a declining turnover rate. The potential repercussions of the financial troubles faced by major client WM Motor, which has entered bankruptcy proceedings, raises concerns over whether ZENERGY’s receivables could face a similar crisis.

In addition, the sustainability of ZENERGY's future performance is now being called into question given the pressures from debt and receivables.

As a manufacturer of power and energy storage batteries, ZENERGY offers integrated solutions including battery cells, modules, packs, and battery management systems. Following its IPO in April 2025, which garnered about HK$1 billion for capacity expansion and the development of smart manufacturing facilities, the company announced on October 17, 2025, that it plans to undertake a public placement to raise another HK$500 million.

According to its prospectus, ZENERGY had completed three rounds of financing between 2022 and 2024, cumulatively raising a total of HK$3.4 billion.

The persistent need for financing points to ZENERGY's longstanding cash flow issues. Data from Wind indicates that the annual capital expenditures of ZENERGY far exceed the net operating cash flow generated during the same periods.

As of June 30, 2025, ZENERGY held cash and cash equivalents of HK$2.549 billion, an increase of approximately 20% compared to HK$2.034 billion at the end of 2023. However, short-term loans rose dramatically to HK$1.682 billion, more than doubling from HK$0.694 billion at the end of 2023, highlighting an increasing trend in debt under ongoing losses.

The company plans to allocate about 70% of the net proceeds from this placement toward the construction, equipment purchase, and contingency funds for the second phase of its new production facility in Changshu; roughly 10% will go to the construction of the all-solid-state battery pilot line; about 10% will be earmarked for research and development; and approximately 10% will be allocated for working capital and general corporate purposes.

Data disclosed in the prospectus indicates that from 2021 to the first quarter of 2024, ZENERGY's effective production capacity grew from 1.3 GWh to 5.1 GWh, 14.5 GWh, and then 5.1 GWh, with corresponding output of 0.9 GWh, 3.1 GWh, 7 GWh, and 1.5 GWh, leading to a notable decline in capacity utilization rates.

Despite the overall positive trend in operational performance in recent years, ZENERGY's payment collection has continuously worsened. In 2022 through the first half of 2025, revenues were HK$3.29 billion, HK$4.162 billion, HK$5.13 billion, and HK$3.172 billion, with net profits of HK$-1.72 billion, HK$-590 million, HK$910 million, and HK$220 million, respectively, showing year-on-year improvements in both revenue and profit.

From January to September of this year, ZENERGY's power battery shipments reached 11.05 GWh, achieving a market share of 2.24%, marking a yearly increase of 0.43 percentage points.

However, amidst these performance improvements, the company's collection situation is deteriorating, with accounts receivable rising sharply from HK$326 million in 2022 to HK$1.147 billion in 2023 and HK$1.623 billion by 2024. The turnover rates for accounts receivable have dropped significantly to 10.34, 5.65, and 3.70 over the same periods.

Furthermore, before the IPO, one of ZENERGY’s major clients, WM Motor, began experiencing operational difficulties starting in 2022 and entered bankruptcy reorganization, which directly led to the cancellation of battery procurements from ZENERGY. This resulted in ZENERGY's losses expanding from HK$402 million in 2021 to HK$1.72 billion in 2022.

The potential for significant write-offs related to ZENERGY's sizeable accounts receivable remains a critical concern, particularly in light of the pressures from debt and receivables, calling into question the sustainability of the company's future performance.