Shen Wan Hongyuan: First grant to Zhengli Xinneng (03677) “increase in holdings” rating, profit flexibility continues to be unleashed
The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that at present, new energy passenger vehicles on the downstream power side of lithium batteries are gradually becoming popular, and the energy storage side has ushered in a period of explosion in construction where light storage is affordable. As a leading company in the lithium battery industry, Zhengli Xinneng (03677) is expected to fully benefit from its own lean manufacturing value creation while continuously increasing its share in the industry. At present, the company continues to develop new models for new customers in the power field. The release of energy storage cells is imminent, and the scale effect is expected to gradually become apparent after the shipment and release of dynamic battery cells in the future. The bank estimates that the company's net profit for 25-27 will be 5.4/12.1/1.84 billion yuan, respectively, and the PE corresponding to the closing price on December 24 is 36/16/11 times, respectively. The bank gave the company a 26-year PE valuation of 20 times (the average valuation of comparable companies in the industry), covered it for the first time, and gave it a “buy” rating.
Shen Wan Hongyuan's main views are as follows:
The strategy focuses on “land, sea and air connectivity”, and the multi-dimensional layout drives high-quality growth
Since its establishment in 2019, the company has gone through technology accumulation, capacity expansion and customer expansion, and has now entered a period of rapid development with breakthroughs in quality and efficiency. Relying on the “land, sea and air interconnection” strategy, the product system covers the fields of power, energy storage and aviation batteries, while the company has taken the lead in achieving airworthiness certification and mass production delivery of aerospace-grade power batteries. At the governance level, the company has formed a stable equity structure with “founder leadership, state-owned capital empowerment, and industrial capital collaboration”. The core team has a deep industrial background and international management experience, laying a solid foundation for long-term development. In 1H25, the company's revenue reached 3.17 billion yuan, a year-on-year increase of 71.9%, and net profit reached 220 million yuan, successfully turning a loss into a profit. The gross margin increased to 18%, showing a good trend of unleashing scale effects and increasing profit resilience.
Dynamic storage two-wheel drive is booming, and supply and demand optimization lead a new battery profit cycle
The downstream NEV and energy storage market continues to be booming. The domestic electrification process deepens. The 1-3Q25 NEV sales volume reached 11.2 million units, and the penetration rate climbed to 46%. The electrification of commercial vehicles accelerated, compounding the increase in the charging capacity of bicycles, further increasing the demand for power batteries. Overseas markets are contributing significant increases, and Western European policies encourage the gradual expansion of products from emerging markets and jointly promote the expansion of global demand. The energy storage sector is growing strongly, and global energy storage battery shipments are expected to jump from 530 GWh in 2025 to 1,343 GWh in 2028, becoming the new engine for lithium battery demand. The lithium battery industry has entered a cycle of improvement in supply and demand, and the competitive pattern is showing a “leader-led, diversified and co-advanced” trend. In this context, the company's market share is steadily increasing, and it is expected to rely on industry recovery and its own technical advantages to open up new space for profit improvement
Technology premiums resonate with scale effects, and profit flexibility continues to be unleashed
The company is deeply tied to core customers such as Zero Run and SAIC Motor, and order visibility has increased significantly. The production capacity layout is accurately anticipated. After 25 years of expansion, the total production capacity will reach 35.5 GWh, and is expected to reach 50.5 GWh in 27, laying the foundation for continuous shipment volume. The company has outstanding lean manufacturing capabilities, the platform-based system adapts to the needs of multiple scenarios, the differentiated layout of the electrochemical system covers multiple technical routes, and the product premium capacity is expected to increase steadily. 1H25, the company shipped 7.6 GWh of power batteries, and the scale effect promoted continuous optimization of unit costs. With the release of high-end products, rising capacity utilization and diversification of customer structures, the company is expected to continue to strengthen its cost advantage and technical premium capabilities in industry competition, and continuously release room for profit growth.
Risk warning: the risk of a sharp rise in raw material prices; the risk of a sharp drop in product prices due to increased competition in the industry; the risk of overseas trade protection policies.