Core Viewpoint - Dongwu Securities research report indicates that EVE Energy has reached an operational turning point, with expectations for both volume and profit to increase in the future, leading to potential profit elasticity [1] Group 1: Production and Sales - In Q2 2025, EVE Energy shipped 27.3 GWh, representing a quarter-on-quarter increase of 30% and a year-on-year increase of 21% [1] - The capacity utilization rate reached 90% in June, with projected shipments of 130 GWh in 2025, reflecting a year-on-year growth of over 60% [1] - Shipments are expected to reach 200 GWh in 2026, with a year-on-year growth of over 50%, maintaining high growth rates into 2027 [1] Group 2: Profitability - Battery prices have bottomed out, and energy storage is operating at full production and sales [1] - With the release of popular models from Xiaopeng and Leap Motor, capacity utilization is expected to continue increasing [1] - The joint venture materials factory is anticipated to become profitable, leading to significant operational improvements in Q3 [1] Group 3: Future Outlook - The introduction of large cylindrical and large iron-lithium new products in 2026 is expected to drive volume growth, particularly in overseas markets [1] - The energy storage business is projected to contribute 7 billion in profits, with profit elasticity expected in 2026-2027 [1] - EVE Energy is focusing on differentiated products, with full orders for large cylindrical and large iron-lithium batteries, entering a harvest period in 2026 [1] Group 4: Financial Projections - The net profit attributable to shareholders for 2025 is maintained at 4.7 billion, reflecting a year-on-year increase of 16% [1] - Given the rapid growth in shipments, a valuation of 25x is assigned for 2026, corresponding to a target price of 92 yuan, maintaining a "buy" rating [1]

Core Viewpoint - Dongwu Securities report indicates that EVE Energy has reached an operational turning point, with expectations for both volume and profit to increase significantly in the future [1] Group 1: Production and Sales - In Q2 2025, EVE Energy shipped 27.3 GWh, representing a quarter-on-quarter increase of 30% and a year-on-year increase of 21% [1] - The production capacity utilization rate reached 90% in June [1] - The company is projected to ship 130 GWh in 2025, a year-on-year increase of over 60%, and 200 GWh in 2026, a year-on-year increase of over 50% [1] Group 2: Profitability - Battery prices have bottomed out, and energy storage is operating at full capacity, contributing to improved profitability [1] - The company expects significant operational improvement in Q3, with the new large cylindrical and large iron-lithium products set to launch in 2026, further enhancing profitability [1] - The energy storage business is anticipated to contribute 7 billion yuan in profit, with profit elasticity expected in 2026-2027 [1] Group 3: Market Position and Strategy - EVE Energy is focusing on differentiated products, with strong orders for large cylindrical and large iron-lithium batteries [1] - The company maintains a target net profit of 4.7 billion yuan for 2025, a year-on-year increase of 16% [1] - Given the rapid growth in shipments, a valuation of 25x for 2026 is applied, leading to a target price of 92 yuan, with a "buy" rating maintained [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is at an operational turning point, with new products set to ramp up production, leading to expected profit elasticity [9] - The company achieved a significant increase in shipments, with Q2 2025 shipments reaching 27.3 GWh, a 30% increase year-on-year [9] - The company is expected to see substantial revenue growth, with projected total revenue of RMB 66.175 billion in 2025, representing a 36.12% year-on-year increase [1] Financial Projections - Total revenue projections for the company are as follows: - 2023: RMB 48.784 billion - 2024: RMB 48.615 billion - 2025: RMB 66.175 billion - 2026: RMB 92.893 billion - 2027: RMB 116.653 billion [1] - Net profit attributable to the parent company is projected to be: - 2023: RMB 4.050 billion - 2024: RMB 4.076 billion - 2025: RMB 4.717 billion - 2026: RMB 7.500 billion - 2027: RMB 10.502 billion [1] - The earnings per share (EPS) forecast is as follows: - 2023: RMB 1.98 - 2024: RMB 1.99 - 2025: RMB 2.31 - 2026: RMB 3.67 - 2027: RMB 5.13 [1] Market Position and Product Development - The company is focusing on differentiated products, with a strong order book for large cylindrical and lithium iron phosphate batteries, expecting to reach a production capacity of 300 GWh by 2027 [9] - The company has officially launched its solid-state battery production facility in Chengdu, with the first product achieving an energy density of 300 Wh/kg [9] - The company anticipates significant contributions from its energy storage business, projecting a profit contribution of RMB 7 billion [9]

Core Viewpoint - The company's performance in Q2 2025 met expectations, with revenue of 15.4 billion, a year-on-year increase of 25% and a quarter-on-quarter increase of 20%. However, net profit decreased by 53% year-on-year and 54% quarter-on-quarter, primarily due to stock incentive expenses and credit impairment provisions [1]. Group 1: Performance Summary - Q2 2025 revenue reached 15.4 billion, with a year-on-year growth of 25% and a quarter-on-quarter growth of 20%. Net profit was 500 million, down 53% year-on-year and 54% quarter-on-quarter, impacted by stock incentive expenses of 490 million and credit impairment of 240 million [1]. - The power segment reported H1 2025 revenue of 5.1 billion, a year-on-year decline of 29%, with a gross margin of 17.6%, up 6.2 percentage points. Sales volume reached 21.48 GWh, a year-on-year increase of 59% [1]. - The energy storage segment had H1 2025 revenue of 10.3 billion, down 49% year-on-year, with a gross margin of 12.0%, down 2.3 percentage points. Sales volume was 28.71 GWh, a year-on-year increase of 37% [1]. - The consumer segment reported H1 2025 revenue of 5.1 billion, down 26% year-on-year, with a gross margin of 26.7%, down 1.6 percentage points. The company expects to maintain stable net profit contributions in Q2 2025 [1]. Group 2: Future Outlook and Developments - The company plans to maintain capital expenditures of 10 billion per year from 2025 to 2027, with multiple external collaborations starting in July [2]. - The first solid-state battery product is expected to be delivered in small batches in August, with a second product launch in Q3 and a 100 MWh production line to be completed this year [2]. - Stock incentive expenses for H1 2025 were 570 million pre-tax and 490 million post-tax, with an expected 420 million pre-tax for the second half of the year [2].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is positioned as a leading second-tier battery manufacturer with significant growth potential across four major segments: energy storage, commercial vehicles, passenger vehicles, and consumer batteries [8] - The company has achieved a comprehensive battery technology reserve, ranking second globally in energy storage battery market share, and is expected to see substantial growth through new products and international expansion [8] - The company has a stable leading position in lithium primary batteries and is experiencing high demand in consumer cylindrical batteries, with a strong contribution from its investment in Smoore [8] Summary by Sections Company Overview - The company has a rich product line and has successfully navigated through various industry cycles, focusing on differentiated development strategies in large cylindrical and large iron-lithium batteries [15][16] - The management team has extensive experience in the lithium battery industry, with a strong emphasis on technological advancement and strategic foresight [19][20] Business Structure - The company has achieved a compound annual growth rate (CAGR) of 54% in revenue over the past seven years, driven by balanced growth across multiple business segments [29][30] - The revenue forecast for 2024 is projected at 47.57 billion yuan, with a significant contribution from energy storage and power batteries [1] Energy Storage Batteries - The company has rapidly ascended to the second position in the global energy storage battery market, with a market share of 15.5% in 2024, and is expected to maintain a growth rate of 45% in shipments [42][45] - The global energy storage market is anticipated to grow significantly, with the company well-positioned to capitalize on this trend through its new product offerings and overseas production capabilities [42][44] Consumer Batteries - The company is experiencing robust demand for its consumer cylindrical batteries, with a projected shipment of 1.1 billion units in 2024, reflecting a 70% year-on-year increase [30] - The company maintains a leading position in the lithium primary battery market, with stable revenue growth and high profit margins [30][32]