EVE Energy 2Q26 Earnings Preview: Net Profit Surges 234%-282% YoY

Overview

Nomura Securities released a quick review of EVE Energy's (300014) 2Q26 earnings preview. The company released its first-half earnings preview after market close on June 15, with attributable net profit increasing significantly by 95%-110% YoY to CNY 3.13-3.37 billion, and recurring net profit increasing 110%-125% YoY to CNY 2.43-2.60 billion. Based on these figures, 2Q26 single-quarter net profit is estimated at approximately CNY 1.68-1.93 billion, representing a substantial YoY increase of 234%-282% and a QoQ increase of 16%-33%. Nomura believes this preview met expectations, helping to alleviate market concerns about raw material price hikes eroding margins, and maintains its 'Buy' rating and unchanged CNY 100 target price.

Core views

Profitability: The company's first-half revenue increased approximately 60% YoY, with 2Q26 revenue expected to reach CNY 24.4 billion (+59% YoY, +18% QoQ). The 2Q26 net margin range was 6.9%-7.9%, basically stable compared to 7.0% in 1Q26, indicating that the company maintained profitability stability in its core business despite pressure from rising raw material prices. Growth Drivers: Management attributed performance growth to two factors—first, high revenue growth driven by continuous business expansion; second, effective mitigation of the impact of rising raw material prices. Nomura further points out that the company is well-positioned to benefit from three trends: strong momentum in energy storage (ESS) demand, market penetration of new products such as large cylindrical batteries, and first-mover advantage in building an overseas energy storage battery factory in Malaysia. Valuation and Rating: Nomura maintains its 'Buy' rating and unchanged CNY 100 target price based on SoTP (Sum-of-the-Parts). This target price corresponds to a 21x P/E ratio based on the forecast EPS of CNY 4.75 for 2027. Specifically, the power battery and energy storage battery segments are valued at 25x 2027F P/E, while the consumer battery segment is valued at 20x, incorporating the latest market value of the company's 31% stake in Smoore International. The current share price corresponds to a FY26F P/E ratio of approximately 16x.

Analysis framework

This report adopts an event-driven analysis framework, using the earnings preview as an entry point to compare announcement data with historical quarterly data to verify performance trends. In terms of valuation methodology, Nomura uses SoTP (Sum-of-the-Parts), pricing different business lines separately and summing them up, rather than using a single consolidated P/E ratio, reflecting the diversified nature of battery companies. Additionally, the report treats changes in quarterly net margin as a key indicator for measuring cost pass-through ability and earnings quality, tracking margin trends through both QoQ and YoY dimensions to judge whether raw material cost shocks have been effectively absorbed.

Methodology notes

• Valuation MethodSOTP Segment Valuation

  SoTP (Sum-of-the-Parts) Segment Sum Valuation

  Pricing each business segment of a diversified company using appropriate valuation multiples, then summing them to derive the overall target price. In this report, the power battery and energy storage battery segments use a 25x P/E multiple, while consumer batteries use a 20x P/E multiple, also incorporating the value of equity holdings. This approach better reflects the true value of each business compared to a single consolidated valuation.

• Industry/Industrial Analysis FrameworkVolume-Price Breakdown

  Revenue and Margin Breakdown Analysis

  Decomposing performance drivers into 'volume' (revenue growth rate) and 'profit' (net margin level) dimensions. While confirming high revenue growth, this report focuses on tracking whether net margins remain stable to judge if cost increases are being effectively passed through. This is a classic method for analyzing the earnings quality of manufacturing enterprises.

• Company Fundamentals and Financial FrameworkEarnings Quality Analysis

  Comparison of Recurring Net Profit and Attributable Net Profit

  Identifying the impact of non-recurring gains and losses by comparing the growth rate differences between 'attributable net profit' and 'recurring net profit'. This report cites both indicators, where the growth rate of recurring net profit (110%-125%) is higher than that of attributable net profit (95%-110%), suggesting potential non-recurring gains in the first half, indicating stronger actual growth in core operations.

Key data

• 1H26 Attributable Net ProfitCNY 3.13-3.37 billionIncreased 95%-110% YoY
• 1H26 Recurring Net ProfitCNY 2.43-2.60 billionIncreased 110%-125% YoY
• 2Q26 Net ProfitCNY 1.68-1.93 billion+234% to +282% YoY, +16% to +33% QoQ
• 2Q26 RevenueApprox. CNY 24.4 billion+59% YoY, +18% QoQ
• 2Q26 Net Margin6.9%-7.9%7.0% in 1Q26, basically flat
• First-Half Revenue GrowthApprox. 60%YoY
• Target PriceCNY 100.00SoTP valuation, unchanged
• Current Share PriceCNY 58.77Closing price on June 15, 2026
• FY26F P/E RatioApprox. 16xLevel corresponding to current share price
• Implied 2027F P/E Ratio from Target Price21xBased on 2027 forecast EPS of CNY 4.75

Impact & implications

Nomura believes that this earnings preview helps alleviate market concerns about raw material cost increases impacting EVE Energy's margins, proving the company possesses effective cost pass-through capabilities. Driven by high growth in energy storage demand, penetration of new products like large cylindrical batteries, and overseas capacity layout in Malaysia, the company's medium-to-long-term growth path is clear. The current FY26F P/E ratio of around 16x appears attractive to Nomura, with the CNY 100 target price implying approximately 70% upside.

Risks

• Risk of overcapacity in power batteries: Aggressive industry expansion may lead to supply-demand imbalance
• Intensified price competition among domestic and international battery manufacturers
• Tightening policy regulation in China's e-cigarette market (related to Smoore International)

What to watch

• Sustainability of energy storage (ESS) demand growth
• Market penetration progress of new products such as large cylindrical batteries
• Progress of the overseas energy storage battery factory in Malaysia