EVE Energy: Orders support a ramp-up in 2027, while taxes and ramp-up costs continue to constrain profit recovery

What supports the high-growth targets for 2027?

Management expects power battery shipments to grow by around 100% year on year and energy storage battery shipments by more than 50% in 2027, supported by accelerating deliveries of large cylindrical batteries to BMW, commercial vehicle demand and US energy storage orders. Management stressed that the improved outlook reflects greater order visibility after products obtained certification and deliveries stabilized.
The disclosed operating baseline is as follows: combined power and energy storage battery shipments exceeded 53 GWh in the third quarter of 2026, while the fourth-quarter production schedule is planned to increase by 15%–20% quarter on quarter. Higher scheduled production provides a bridge to subsequent volume growth, but it is a different metric from actual shipments.

Demand for large cylindrical batteries is substantially above management’s initial expectations: the company expects deliveries of nearly 10 GWh in 2026, rising to more than three times that volume in 2027. Existing plants in Jingmen and Shenyang are already operating at full capacity and cannot fully meet demand. Additional deliveries will need support from the new Hefei plant, and the customer base will also expand to Mercedes-AMG and domestic automakers.
Management expects energy storage capacity to remain fully utilized through 2027, when overseas shipments will account for at least 40% of the total. Under Fluence’s 2027–2031 framework agreement, deliveries of approximately 16 GWh in 2027 have been confirmed; allocation of the remaining more than 200 GWh has yet to be finalized. Shipments to some US customers will ramp up from the second half of 2026 and contribute to full-year shipments in 2027.
Shipments of high-capacity energy storage cells have been relatively slow, which management attributed to a deliberate shift of capacity to commercial vehicles. The company is increasing capacity under its own control by improving equipment efficiency and gradually reducing outsourced energy storage production.

Overall gross margin improved only slightly quarter on quarter in the third quarter, driven primarily by energy storage and secondarily by power batteries. The share of overseas shipments rose by nearly 3 percentage points quarter on quarter, while international customers are generally more profitable; this is also an important route for management in seeking to lift power and energy storage gross margins toward 18%–20%.
Tax costs will continue to offset some of the improvement. Agreements on consumption tax and export tax rebate adjustments have been reached with the vast majority of customers, but some costs are shared by both parties, and negotiations continue with a small number of domestic passenger vehicle customers. Consumer battery gross margin was also weighed down by initial ramp-up costs at the Malaysian cylindrical battery plant; management expects it to recover in the fourth quarter.
The Hungarian plant is scheduled to begin mass production in the second half of 2027, with two of its three planned production lines to be installed before year-end. Local production in Europe will help ease pressure from tariffs, export tax rebates and logistics costs, but its contribution depends on this commissioning timetable.

In the third quarter, the company recognized a one-off investment gain of more than 300 million yuan from exiting its separator joint venture with SEMCORP. This contribution should be excluded when assessing sustainable profitability.
During the same period, it also incurred approximately 270 million yuan in share-based payment expenses and 60 million yuan in foreign exchange losses. Quarterly profit was affected by investment gains, incentive expenses and exchange rates, so total profit alone cannot establish the extent of operating improvement in the battery business.

Citi maintains its Buy rating and top-pick designation, with a target price of 83.4 yuan. Its sum-of-the-parts valuation assigns 78.2 yuan per share to the battery business and 5.2 yuan per share to other contributions, implying a 2027 forecast price-to-earnings ratio of 16.7 times.
The 2026 forecast EV/EBITDA multiple applied to the battery business was lowered from 15.1 times to 14.3 times because Citi expects EBITDA to continue growing relatively quickly over 2026–2028, but at a slower rate. Improving orders support its positive operating outlook, while the valuation incorporates the constraint of slowing growth.