Huatai Securities | Penghui Energy (300438 CH): On the Three Expectation Gaps
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Huatai Securities initiates coverage of Penghui Energy (300438 CH) with a Buy rating and a target price of RMB 108.15, applying 15x 2027E PE versus a 14x peer average. Focused on energy storage, the company ranked global top-two in 2025 shipments of both household-storage batteries and Chinese commercial-and-industrial storage systems. Three expectation gaps stand out. First, this user-side storage boom stems from the enduring mismatch between renewables rollout and lagging grid upgrades—reinforced by European restocking, Australian subsidies and emerging-market demand—so it should prove far more persistent than 2022's pulse. Second, with small-storage-cell CR3 above 75%, Penghui's dispersed customer base and strong price pass-through confer greater profit resilience than typical battery makers; it raised prices first in mid-2025 and turned profitable again in 25Q3. Third, capacity expansion toward nearly 100GWh by early 2027, overseas delivery and AIDC products (dedicated cells expected to add profit from 1H27) secure growth beyond the 314Ah era, while 588Ah mass production should cut unit costs a further 5-10%. Huatai forecasts 2026-28 attributable net profit of RMB 1.902/3.631/4.386 billion (+823%/+91%/+21%), with gross margin recovering from 14.6% in 2025 to above 21%. Risks: softer storage demand, fiercer competition, price declines.