On August 31, ZENERGY (03677) released its interim results for the first half of 2026, posting revenue of RMB 5.44 billion, a 71.4% surge from the previous year, with net profit reaching RMB 370 million, up 68.6% year-on-year and extending a streak of upward momentum. Operating cash flow also came in strong at RMB 640 million, an improvement of RMB 770 million compared to the prior corresponding period, demonstrating solid alignment between top-line growth and bottom-line gains.

Commenting on the earnings performance, the company's management noted that the first six months of 2026 saw the domestic lithium battery industry continue its structural recovery, characterized by a dual-growth pattern of dynamic battery product iterations and a rapid expansion in the energy storage sector. While downstream demand showed signs of a rebound, persistent uncertainties remained, including volatile raw material prices, fragmented industry capacity, and escalating overseas trade barriers. In response to this complex environment, the company has adhered to a prudent operating strategy focused on upgrading manufacturing capabilities and ensuring high-quality delivery, while deepening internal cost controls and expense management to effectively hedge against cyclical volatility.

From achieving a turnaround to profitability in 2024, to a marked improvement in earnings power in 2025, and now to simultaneous growth in both revenue and profit in the first half of 2026, ZENERGY continues to consolidate a development foundation that prioritizes scale, efficiency, and quality. During the reporting period, shipments of both power batteries and energy storage products grew rapidly, expanding the revenue base. However, a phase of rising upstream raw material prices, combined with the lag typically associated with long-term contract arrangements and customer negotiations, meant that cost pass-through to downstream prices was partially delayed. Additionally, the newly commissioned 10GWh plant was still in its ramp-up phase during the first quarter, meaning economies of scale had yet to be fully realized, leaving room for further margin enhancement. Despite this, ongoing efforts in refined operations, cost reduction, and expense control drove continued optimization of expense ratios, resulting in a year-on-year increase in net profit.

Looking to the second half, all production lines are running steadily with capacity utilization at elevated levels, and the newly added capacity is gradually moving into stable production. As customer deliveries continue to progress and cost pass-through takes full effect, the company's operating quality and earnings resilience are expected to strengthen further.

Power battery business solid, structural optimization underpins profitability

The power battery segment remains the core pillar of both revenue and profit growth for ZENERGY. The company continues to focus on the premium passenger vehicle market, adopting a customer-centric approach and prioritizing product competitiveness while continuously refining its customer mix, product portfolio, and capacity allocation to achieve high-quality, steady business growth. In parallel, several vehicle models equipped with the company's batteries from key OEM customers have seen expanding overseas deliveries, further unlocking related battery demand.

In the first half of 2026, ZENERGY climbed from seventh to fifth place in domestic passenger vehicle installation rankings, solidifying its market position. During the period, the company deepened its refined operations, advancing the iteration of high-performance, high-cost-performance, and high-safety power battery products to precisely align with the diversified, high-end, and intelligent demands of the downstream automotive market. At the same time, capacity allocation was dynamically optimized to improve utilization rates and production-sales matching efficiency, while production losses and operating costs were tightly controlled. By strengthening profitability across three key dimensions—customer quality, product performance, and production efficiency—the company ensures the power battery business remains a stable and core contributor to earnings.

Energy storage accelerates, forging a second growth engine

While consolidating its power battery foundation, energy storage is now the company's key strategic focus as a second growth driver. In the first half of 2026, revenue from energy storage batteries reached RMB 590 million, accounting for over 10% of total revenue and representing a nearly eight-fold increase compared to the same period last year. Leveraging its long-standing expertise in cell R&D, intelligent manufacturing, and safety and quality management, the company is advancing product iterations, capacity build-out, and application scenario expansion to scale this business with high quality.

Across residential storage, commercial and industrial storage, standalone storage, and AIDC-related storage applications, ZENERGY is continuously enhancing its product portfolio. In the residential segment, the 104Ah and 314Ah standardized cells have become mainstream supply products in the global home storage market. To meet differentiated needs, custom versions of the 100Ah and 314Ah cells for residential use are expected to begin mass production in the second half of the year. For commercial and industrial, standalone, and AIDC storage scenarios, the company has laid out products ranging from 100Ah/104Ah, 235Ah, 314Ah, and up to 587Ah and 588Ah, with plans for phased volume sales starting in 2026.

In line with the trend toward larger format cells and long-duration storage, ZENERGY has already positioned a new product line compatible with next-generation large-capacity cells and is developing cells exceeding 1400Ah and 2700Ah. By driving extreme cost reduction, the company aims to build a next-generation competitive edge and refine complex-scenario storage solutions. On the manufacturing front, the 10GWh capacity added at the end of 2025 is ramping up smoothly, and the second phase of new capacity is expected to come online gradually in the fourth quarter of 2026, ensuring manufacturing readiness for long-duration storage shipments and scaled delivery.

Looking ahead, as the product matrix expands, capacity scales up, and application scenarios broaden, the energy storage business is set to strengthen ZENERGY's growth momentum beyond automotive power batteries, diversify its business structure, and serve as a critical pillar for long-term growth.

Smart manufacturing upgrades enhance quality, aviation-grade standards build core moat

During the reporting period, the company deepened its smart manufacturing strategy, forward-looking implementation of an "AI + Manufacturing" digital upgrade framework, leveraging technology to improve production efficiency, enhance quality, and reduce costs. Thanks to stringent production standards, low-carbon manufacturing practices, and advanced intelligent manufacturing capabilities, ZENERGY successfully secured the "National-Level Green Factory" designation, earning authoritative national recognition for its green production capacity and industry brand influence.

Currently, ZENERGY has established a full-process advanced manufacturing system centered on "nano-level materials, micron-level manufacturing, and medical-grade inspection," maintaining high-standard controls from raw material management to production and final product testing. The company's proprietary "Three-Direct" management model—"logistics as workstation, workstation as manufacturing, manufacturing as quality inspection"—deeply integrates the entire production chain. This is complemented by a "Three-Degree" management system covering equipment reliability, product health, and personnel proficiency, strictly enforcing the "Three-No" objectives of no defective production, no defective flow, and no defective output, creating a quality barrier defined by "aviation-grade safety, automotive-grade application."

Through comprehensive digital, intelligent, and refined upgrades, ZENERGY has seen sustained improvements in production efficiency, product yield, and delivery stability, effectively achieving cost reduction and efficiency gains while further enhancing its core operational resilience to navigate industry cycles.

Deep-rooted breakthroughs, steadily unlocking long-term growth value

Looking ahead, as power battery technology routes continue to evolve and energy storage applications move toward greater diversification and scale, competition in the lithium battery industry will increasingly focus on product value, manufacturing capability, operational efficiency, and sustainable development quality. At this new stage of industry development, ZENERGY will continue to be guided by customer demand, building on its long-accumulated technology, manufacturing, and quality management foundations to strengthen the overall competitiveness of its green energy business.

Building on the stable operating foundation of the first half, the company will consolidate its competitive advantages in the power battery business while accelerating the commissioning and ramp-up of new energy storage capacity, refining its storage product matrix and scenario coverage to open up diversified growth avenues. Supported by smart manufacturing upgrades and refined management, ZENERGY aims to optimize production efficiency and profit structure, continuously unleashing operational flexibility. As these strategic initiatives progressively translate into results, the company is committed to delivering long-term, stable, and sustainable value to its investors through prudent operations and sustained innovation.