Goldman Sachs: Assigns ZENERGY (03677) a "Buy" rating with a target price of HK$13. High-quality growth reflects the company's competitiveness.

Goldman Sachs released a research report stating that ZENERGY (03677) has a "buy" rating, with a 12-month target price of 13.0 Hong Kong dollars based on SoTP, corresponding to a 139% potential upside. The bank predicts that ZENERGY is likely to become the fastest-growing company in the Chinese battery industry, covering a range of growth companies that achieve ROIC higher than WACC. In terms of valuation, the stock currently trades at a lower EV/EBITDA for 2026E compared to the industry average, making it attractive from a valuation perspective. The report points out that the company's founding team comes from Fuyao Glass Industry Group, giving them accumulated experience in automotive parts manufacturing systems, production management, and cost control, enabling them to strike a good balance between growth and returns. Goldman Sachs believes that ZENERGY's competitiveness does not simply come from expanding shipment scale, but rather from its high-quality growth capabilities, including an understanding of industry cycles, customer demands, and manufacturing systems, leading to quality control, manufacturing stability, cost efficiency, and input-output balance. The bank expects that as the customer base continues to diversify, the company's market share is likely to expand further, and the energy storage demand cycle will be a major industry catalyst in the next two years. Goldman Sachs predicts that ESS demand will accelerate significantly in 2026-2027, but with the release of additional supply and a return to normal demand growth rates, there may be some pressure on the industry after 2028. For ZENERGY, its ESS business has a lower starting point, making it easier to benefit from low-base growth in the short term. Compared to companies that are already heavily dependent on ESS business, the company is relatively less impacted by subsequent supply and demand fluctuations. The bank notes that ZENERGY has entered the Tier-2 power battery camp in China, and key variables to track in the future include whether the customer structure can continue to diversify, whether product quality and delivery capabilities are stable, whether financing and customer acceptance can improve in ESS projects, and whether the company can maintain a good level of capital returns during expansion.