Citi: Enjie shares see higher sales volumes and prices in the third quarter; company raises 2027 sales guidance

Why did third-quarter profit grow?

Enjie's net profit for the third quarter of 2026 was 974 million yuan, up 74% quarter on quarter; net profit for the first three quarters was 1.794 billion yuan, in line with the company's earlier earnings forecast.
Both volume and price improved: according to management, third-quarter sales volume was 4.5 billion square meters, up 41% year on year and 7% quarter on quarter; the average selling price per unit rose 9% quarter on quarter.
Third-quarter gross profit was 1.98 billion yuan, up 36% quarter on quarter; the overall gross margin rose from 30.8% in the second quarter to 36%. Citi believes full capacity utilization and price increases during the quarter may explain the sequential improvement in gross margin.

The company raised its 2027 sales guidance from 20 billion square meters to 22 billion square meters, an increase of 10% from the previous target. Management said current demand is strong and capacity utilization is very high.
The company's sales target for the fourth quarter of 2026 is approximately 4.5 billion square meters, unchanged from the third quarter; on that basis, full-year sales would reach 16.75 billion square meters, above the previous guidance of 16 billion square meters. Using that as a baseline, the 2027 target implies growth of approximately 31%.

Operating cash flow for the first three quarters of 2026 was 2.042 billion yuan, up 133% year on year; capital expenditure over the same period was 1.2 billion yuan, up 16% year on year. Free cash flow swung from a net outflow of 156 million yuan in the same period a year earlier to a net inflow of 845 million yuan.
However, although third-quarter free cash flow remained positive at 260 million yuan, it fell 35% year on year and 55% quarter on quarter. The net debt ratio was 44% in the third quarter, down 1 percentage point from the second quarter.

Citi maintained its buy rating and target price of 81.9 yuan per share. The bank uses a price-to-book valuation because net assets are more stable than earnings per share; its target price corresponds to a 2026 forecast price-to-book ratio of 3.01 times, 0.4 standard deviations below the historical average.
The valuation discount reflects execution and utilization risks during capacity expansion. Downside factors listed by Citi also include greater-than-expected competition in equipment, weaker-than-expected battery demand, particularly for energy storage, rising raw material costs, and an extended capital expenditure cycle in the separator industry.