Zhengli New Energy (03677) is at a critical point where the industrial cycle and capital cycle resonate.
Recently, the company signed a listing counseling agreement with Cathay Pacific Haitong Securities to officially launch the A-share IPO process. Coinciding with Goldman Sachs's release of a research report, it gave Zhengli Xinneng a “buy” rating. Based on SoTP's 12-month target price of HK$13.0, corresponding to 139% upward space. Goldman Sachs clearly stated that Zhengli Xinneng is expected to become the fastest growing Chinese battery company in its coverage, and is also one of the few targets that can achieve ROIC that continues to be higher than WACC during rapid expansion. Currently, it corresponds to about 5.2 times the 2026E EV/EBITDA, which is more than 50% off the industry average of 12.3 times. There is plenty of margin of valuation safety, and significant room for value revaluation.
The Zhitong Finance App believes that lean manufacturing creates a cost moat, a booming track with dynamic and storage double wheel card slots, and the orderly release of production capacity to match high-certainty orders — Zhengli Xinneng is speeding up along a clear value chain. When Goldman Sachs's “buy” rating resonates with the return to A launch, this lithium battery “dark horse”, which was once underestimated by the market, may be at a new starting point for value discovery and value realization.
Gene casting: lean manufacturing, building a moat, ROIC is higher than WACC verifying sustainable value creation
The underlying competitiveness of Zhengli Xinneng is rooted in the lean manufacturing genes behind it. The company was founded in 2019. Although it started late, the core management team inherited the deep accumulation of lean manufacturing, quality control and cost control in the automotive parts field, making it have a scarce precision manufacturing heritage in the lithium battery industry — forming the deepest moat and the core competitive barrier of Zhengli Xinneng in a racetrack that focuses on scale effects and yield competition.
The lean manufacturing gene continues to translate into strong operating results on the financial side. With the release of the scale effect, the company's unit labor costs continued to decrease, and the cost rate narrowed sharply from 19% in 2022 to 11% in 2025; the gross margin of power batteries was rising year by year, at 13%, 16%, and 19% from 2023 to 2025, reflecting the continuous positive resonance of cost control and product structure upgrading during the rapid expansion of production, and the cost moat continued to be consolidated.
More importantly, Goldman Sachs clearly stated that Zhengli Xinneng is the fastest growing company within its coverage, and is also one of only three battery companies where ROIC (return on invested capital) continues to be higher than WACC (weighted average cost of capital), which fully confirms that the company has the ability to create sustainable value while expanding rapidly. This indicator is extremely valuable in capital-intensive industries — meaning that every dollar invested in capital can generate returns that exceed the cost of capital, verifying the scarcity of profit quality and resource allocation efficiency. Although growth and profitability are at the leading level in the industry, the current valuation of Zhengli Xinneng shows significant discounts, and there is considerable room for subsequent value revaluation.
Double wheel expansion: power infrastructure customer matrix continues to advance, low base, high growth, open up a second growth curve
The underlying capabilities of Zhengli Xinneng's lean manufacturing have been fully verified on the financial side, and this cost and efficiency advantage is being rapidly transformed from “internal power” to “external development” market competitiveness — the customer matrix based on power batteries continues to advance, and the second growth curve with energy storage as a new volume is being accelerated. The revenue growth pattern of two-wheel drive is already clear.
In 2025, the company achieved total revenue of 8.101 billion yuan, an increase of 57.9% over the previous year, of which power batteries contributed 7.68 billion yuan, accounting for 94.8% of total revenue, which is the core pillar of current performance. More importantly, the power battery business is not simply a large-scale expansion — gross margin jumped 3.7 percentage points from 15.2% in 2024 to 18.9% during the same period, which is quite impressive in the lithium battery industry in 2025, where the price war continues to deepen. The trend of increasing quantity and profit has verified the systematic increase in its customer structure and product premium capacity.
The continuous improvement of the customer matrix is the core driving force behind the double increase in business volume and profit. The company has built a diversified customer matrix of “international brands+joint ventures+domestic mainstream brands+new car building forces”. The customer structure is expanding in depth from independent brands and new forces to joint venture brands and international brands, and the share of joint venture customer revenue has increased significantly. Since the joint venture brand has a long certification cycle for battery suppliers, high switching costs, and better implementation of price linkage mechanisms and better profitability, this upgrade in the customer structure helps enhance the visibility and stability of profits. In 2025, the company's targeted projects have increased from 4 in 2021 to 47, and the number of models put into production has increased from 1 to 21. The customer retention rate is as high as 95%, confirming the deep binding of customer relationships and the efficient fulfillment of order conversion.
While power batteries are building a solid basic market, the energy storage business is accelerating into a second growth curve, which is expected to become the company's most flexible growth pole in the next three years. The business is currently small and is mainly constrained by capacity bottlenecks — not demand is insufficient, but production capacity has yet to be released. Shenwan Hongyuan expects energy storage sales of 1.5/3.0/5.0 GWh from 2025 to 2027, respectively, and is on the eve of volume from 0 to 1. Goldman Sachs believes that the ESS business started from a low base and achieved rapid growth. Looking ahead, the 2027 revenue growth rate is expected to remain strong, with a year-on-year increase of 67%, and a steady growth rate of 20%-30% between 2028 and 2030, thanks to the continued increase in market share in the power battery market.
The two major demand sides of power and energy storage resonate, providing ample industry beta support for Zhengli New Energy's shipment growth. Global NEV sales are expected to increase from 20.94 million units in 2025 to 33.36 million units in 2028, a CAGR of about 17%; global energy storage battery shipments are expected to jump from 530 GWh in 2025 to 1,343 GWh in 2028, or about 36%. At the same time, the company is on two booming tracks, compounding the continuous advancement of the customer matrix and the accelerated formation of the second curve of energy storage. Shipments are entering a period of accelerated release, and the scale effect is expected to continue to drive profits to soar.
Capacity realization: stepwise expansion matches high-certainty orders, positive feedback on supply and demand drives continuous profit release
The continuous advancement of the customer matrix has opened up broad room for growth on the revenue side, and transforming this space into actual performance depends on the orderly release of production capacity and efficient implementation. This is the core advantage of Zhengli Xinneng that distinguishes most second-tier battery manufacturers — the high certainty of orders provides a full guarantee for capacity expansion. The stepwise increase in production capacity has in turn strengthened customer confidence and stickiness, and there is a continuous positive resonance between supply and demand.
The orderly release of production capacity is the core part of Zhengli Xinneng's transformation of manufacturing capacity and market demand into performance. At the end of 2024, the company's total production capacity was 25.5 GWh, with a capacity utilization rate of 63%; at the end of 2025, it increased to 35.5 GWh, with the main increase coming from the commissioning of 10 GWh in Galaxy B in the fourth quarter; by the end of 2026, it is expected to further expand to 50.5 GWh, adding 15 GWh to be put into operation by the end of the year. Goldman Sachs expects the 2025-2028E production capacity CAGR to reach 55%. The pace of capacity expansion is highly consistent with customer order volume, providing sufficient capacity reserves to meet continuously growing downstream demand.
The stepwise expansion of production capacity is based on highly determined order visibility. In 2025-2026, various strategic models such as the Zhiji LS6, FAW-Hongqi, and SAIC-GM will be launched one after another, while the Toyota Platinum 7, SAIC Volkswagen extended-range SUV, and Zero Run next-generation platform-based models will also be launched one after another. Stock customers are deeply bound and new customers are expanded in an orderly manner, and the certainty of shipment growth continues to increase.
The positive cycle of capacity expansion and order delivery resonates with the evolution of the industry's supply and demand pattern. Goldman Sachs judged that the lithium battery industry is in a new upward profit cycle. The battery sector is expanding production rationally, and the main focus of expanding production is on Tier 1 and 2 companies with order guarantees. The company's current customer orders are full, and the main models continue to be released, which has a resonance effect with the release of new production capacity. A self-reinforcing positive feedback cycle has formed between rising production capacity and shipment volume. Shenwan Hongyuan expects the company's revenue CAGR to be about 54% in 2025-2027, and net profit to mother will jump from 540 million yuan to 1.21 billion yuan to 1.84 billion yuan. The profit forecasting direction of multiple institutions is highly consistent, further verifying the visibility of capacity release and profit realization. As the customer structure continues to upgrade to joint venture brands and the second energy storage curve accelerates, positive feedback from supply and demand is expected to continue to drive the company to release high-quality profits.
Conclusion: The value chain is clear and the revaluation path can be expected
From manufacturing cost barriers created by lean manufacturing, to the revenue growth pole of two-wheel drive with dynamic storage, to stepped production expansion to match the performance fulfillment path of high-certainty orders. Zhengli Xinneng has built a positive value cycle that is intertwined and self-reinforcing. At an inflection point where the supply and demand pattern in the lithium battery industry gradually clears up and profit differentiation intensifies significantly, enterprises with both scarce manufacturing heritage, high certainty order visibility, and the ability to return sustainable capital should enjoy reasonable valuation premiums. Goldman Sachs also clearly stated that the current valuation level of EV/EBITDA of about 5.2 times seriously underestimates the scarce value of its high-quality growth. Standing at the starting point of the resonance between the industrial cycle and the capital cycle, with the gradual formation of the A+H dual capital platform and the acceleration of the second energy storage curve, Zhengli New Energy is steadily evolving from “undervaluation” to “value revaluation”, and the space for subsequent market value restoration is worth continuing attention.