Key takeaway

The company has formed a three pillar structure of “consumer battery core business + energy storage entering the earnings realization phase + forward positioning in AI edge devices”. The core consumer battery business serves as the company’s foundation. It focuses on a key customer strategy and covers global leading brands such as HP, Dell, and DJI. Overseas revenue accounts for more than 50%, demonstrating strong earnings resilience. The energy storage business focuses on high margin scenarios such as residential energy storage and AIDC. The existing 3GWh capacity is fully utilized and sold out. The business is shifting from the investment phase to the earnings realization phase while actively expanding capacity. The company holds a leading position in AI edge devices. Steel cased stacked batteries have been delivered in batches for AI glasses. Other high performance products have already been supplied to AIPC, robots, and AI toys. We are optimistic that the energy storage business will provide growth momentum for the company. Meanwhile, with its positioning advantage, the company is expected to fully benefit from the volume expansion of AI edge devices.

Thesis

The company started with consumer batteries and has gradually expanded into residential energy storage cells and AI edge device businesses. It has formed a presence driven by the consumer battery core business and dual engines of energy storage cells and AI edge device energy. In its core business, the company implements a key customer strategy and has evolved from a supplier to a strategic cocreation partner, achieving deep binding with customers while continuously increasing its share among major overseas clients. The company currently covers global leading brands including HP, Dell, DJI, Sony, Harman, Google, Amazon, Logitech, Philips, Braun, and LG. Benefiting from strong product quality and comprehensive overseas certifications, the share of overseas revenue has remained above 50% for many years. In our view, different from market expectations, the company’s core business shows strong resilience and is expected to achieve stable growth through its focus on key customers and optimization of its product structure.

Energy storage becomes the second growth curve, with broad demand from residential storage, commercial and industrial sectors, and AIDC energy storage. War-related factors have intensified global energy concerns. Rising energy prices have improved the economics of residential energy storage, driving an outbreak in overseas demand. We believe the high prosperity of overseas residential storage demand is likely to continue. We estimate global small-scale storage demand (commercial and industrial storage, residential storage, and AIDC storage) will reach 64.3/100GWh in 2026–2027, up 63.46%/44.93% YoY. The leap in AI power density has created a significant impact on grid stability. Energy storage in AIDC plays roles such as power supply assurance, peak-valley arbitrage, and dynamic power stabilization. AIDC energy storage batteries mainly include utility-scale storage, UPS backup power, and BBU. UPS backup power and BBU batteries require higher instantaneous discharge capabilities, while utility-scale storage requires longer energy storage duration and has lower requirements for C-rate performance. As AIDC demand is released, market demand for high-C-rate energy storage cells is expected to grow. Compared with the utility-scale storage market, customers in the residential storage, AIDC, and commercial and industrial markets are more stable and offer stronger profitability.

The company focuses on high-margin niche scenarios such as residential storage, commercial and industrial storage, and AIDC storage. Its main customers and end markets are concentrated in overseas markets including Europe, India, Africa, the Middle East, and Southeast Asia. The company currently has 3GWh of residential storage battery cell capacity, which is operating at full production and full sales. It is further accelerating capacity expansion through private placements and its own funds. The company ha s deep capabilities in AIDC battery cells and sodium battery cells, and is expected to enter the high-rate AIDC energy storage market. We expect that in 2027–2028, as new capacity is gradually released, capacity utilization improves, and product prices and profitability continue to recover, the company’s energy storage business is expected to continue contributing to performance and become an important second growth curve.

In terms of operations and management, the company pursues steady operations with a foundation of excellence. As a typical B2B company, it focuses on mainstream high-margin overseas customers and leading key clients, concentrating resources on product R&D and large-scale capacity production. The previously deployed energy storage business has already begun to scale up in 2026 and achieved relatively rapid growth. AIDC energy storage and AI glasses and other edge-side application hardware are also expected to provide development opportunities for the company. We believe the long-standing key client strategy is likely to concentrate the company’s advantageous resources and enable leapfrog development in the future.

Positioning advantage is significant: The ramp-up of AI edge-side scenarios is expected to bring substantial benefits. The company has a first-mover advantage in the AI glasses field. In 2025, it initiated pilot testing, mid-scale testing, and small-batch deliveries for different customers, and has established deep cooperation with leading overseas brand clients. At the same time, it is expanding cooperation with domestic hardware brands such as RayNeo, Li Auto, and Rokid, and has gradually achieved mass production and delivery.

In addition, the company plans to raise RMB400mn through a private placement to build a steel cased stacked lithium battery project, with a planned annual capacity of about 32mn steel cased stacked batteries, mainly targeting AI edge devices such as AI glasses. On the technology side, the company’s steel cased stacking process is more suitable for next generation thin, lightweight, and irregular form consumer electronics scenarios such as AI glasses. Compared with the traditional pouch + winding process, the steel case + stackingprocess can utilize internal space more efficiently and offers advantages in energy density, structural compatibility, safety, and thickness control, making it particularly suitable for terminal products such as AI glasses that require small size, light weight, long battery life, and high reliability. We estimate the market size for AI glasses supporting battery cells will reach about RMB6.3bn by 2030, and the company is expected to fully benefit from the explosive growth of the AI glasses market due to its early positioning advantage. In addition to AI glasses, the company has supplied supporting batteries for AI PCs to customers and has entered the supply chains of multiple robotics customers, with battery modules for AI companion robots and quadruped robotic dogs already achieving mass production and shipment. In addition, the company has proactively deployed forward looking research in cutting edge technologies such as solid state battery materials and high silicon anodes, and breakthroughs in its AI edge battery technologies have become a core driver for value re rating. We expect that, benefiting from the major client strategy in its core business and the energy storage business entering the earnings realization phase, the company’s net profit will reach RMB330mn/RMB510mn in 2026/2027, corresponding to current PE of about 23.1/15.0. We maintain a buy rating.

Risks

Energy storage business demand falling short of expectations: There is uncertainty regarding the expansion and ramp up progress of the company’s energy storage capacity. Demand for residential energy storage in overseas emerging markets is highly affected by geopolitical factors, energy prices, and fluctuations in policy subsidies. If war factors ease or electricity prices decline, strong demand momentum may face pressure.

AI edge business development falling short of expectations: The AI edge business is still in an early stage, and there is a risk that customer onboarding and volume ramp up may fall short of expectations. The steel cased stacking technology route also faces competition from industry process iterations. In addition, the company has a relatively high concentration of major customers. If the share of key customers fluctuates or industry price wars intensify, the pace of profitability recovery will be affected. There is also uncertainty regarding the progress of the private placement and the absorption of new capacity.

Weaker-than-expected demand for consumer electronics: The company’s core business mainly serves downstream consumer electronics scenarios. If memory prices remain high in the future, downstream demand may be suppressed, which would impact the company’s core business.

Intensified industry competition and overcapacity: If industry competition intensifies, the market may fall into homogeneous competition and price wars, leading to shifts in customer share and pressure on corporate profitability.