Shenwan Hongyuan Group: maintains "buy" rating for ZENERGY (03677) with 25-year profit forecast exceeding expectations.

Shenwan Hongyuan Group released a research report stating that it maintains a "buy" rating for ZENERGY (03677). The industry demand is on the rise, and the company's profit can be expected to increase after the release of stored capacity. Currently, the new energy passenger cars on the downstream side of the lithium battery industry are gradually becoming popular, and the energy storage side is entering a period of explosive growth with the construction of light storage reaching price parity. As a leading company in the lithium battery industry, the company is continuously increasing its market share and is expected to benefit fully from the value creation of its lean manufacturing. The company slightly raised its profit forecast for 2025-2027, with expected net profits of 730 million, 1.3 billion, and 1.9 billion yuan respectively, corresponding to PEs of 29, 17, and 11 times. The main viewpoints of Shenwan Hongyuan Group are as follows: Company's 2025 profit forecast exceeds expectations The company's 2025 forecasted net profit is between 680 million and 820 million yuan, a year-on-year increase of 647% to 801%. The significant year-on-year increase in the company's net profit is mainly due to: 1) an increase in battery sales driving revenue growth, and increased investment income from joint ventures; 2) the company's AI-driven closed-loop algorithm technology has improved product quality and production capacity utilization, with economies of scale gradually emerging; cost control measures have been continuously optimized, further increasing gross profit margin; 3) the company has implemented refined expense control, resulting in a significant year-on-year decrease in operating expenses. Technology premium and economies of scale resonate, continuous profit release elasticity The company's passenger car products cover EV and PHEV, and the company has deep ties with core customers such as Leapmotor, SAIC, and GAC, significantly increasing order visibility. The company's lean manufacturing capabilities are outstanding, the platform system is adaptable to multiple scenarios, and economies of scale drive continuous optimization of unit costs. As the company expands in the passenger/commercial/energy storage sectors, climbs the production capacity utilization rate, and diversifies customer structure, the company is expected to continue to strengthen cost advantages and technology premium capabilities in industry competition, continuously releasing profit growth space. Dual-wheel drive of stored capacity and high demand, supply-demand optimization leading the new cycle of 2026 The downstream new energy vehicle and energy storage markets continue to be in high demand, the domestic electrification process is deepening, and according to High Work Lithium, China's total lithium battery shipments in 2026 will exceed 2.3 TWh, a year-on-year increase of about 30%. Among them, energy storage lithium battery shipments are expected to exceed 850 GWh, with a year-on-year growth rate of over 35%; power battery shipments will exceed 1.3 TWh, with a year-on-year growth rate of over 20%. The lithium battery industry is entering a period of supply-demand improvement, and the competitive landscape is showing a "top-led, diversified advancement" trend. According to the China Shipbuilding Industry Group Power Battery Industry Innovation Alliance, the company's domestic power battery installed capacity in 2025 was 15.9 GWh, accounting for 2.1% of the industry, a year-on-year increase of 0.3 percentage points, ranking ninth. The company's market share continues to increase steadily, and it is poised to open up new profit improvement space with the industry recovery and its own technological advantages. Risk warning Risks of a significant increase in raw material prices; risks of intensified industry competition leading to a significant decrease in product prices; risks of overseas trade protection policies.