EVE Energy's second-quarter results were in line with expectations; Nomura maintains Buy and a CNY 100 target price

Overview

This report reviews EVE Energy's 1H26 and 2Q26 results and evaluates subsequent shipment growth and valuation in light of management's conference-call guidance. Nomura believes the results were broadly in line with expectations and that near-term capacity constraints do not alter its expectation of shipment growth exceeding 50% in FY27E; it therefore maintains its Buy rating and CNY 100 target price.

Core views

EVE Energy announced its 1H26 and 2Q26 results after the market close on August 19, 2026. 1H26 revenue increased 62% YoY to CNY 45.7bn, slightly above the approximately 60% growth indicated in the previous profit alert; 2Q26 revenue was CNY 25bn, up 63% YoY and 21% QoQ. 1H26 net profit increased 106% YoY to CNY 3.3bn, near the upper end of the 95% to 110% growth range in the previous profit alert; 2Q26 net profit increased 268% YoY and 28% QoQ. Nomura therefore concluded that the quarterly results were broadly in line with expectations. In terms of margins, 2Q26 gross margin was 14.5%, down 2.9 percentage points YoY but up 0.5 percentage points QoQ. The report believes the sequential improvement may have resulted from better average selling prices and an optimized revenue mix. 2Q26 net margin reached 7.4%, expanding by 4.1 percentage points YoY and 0.4 percentage points QoQ, indicating that net profit growth and net margin improved significantly even though gross margin remained below the prior-year level. Shipment volume was an important driver of earnings growth. Total battery shipment volume increased 60% YoY to 80GWh in 1H26, including 36GWh of EV batteries, up 66% YoY, and 44GWh of ESS batteries, up 55% YoY. Management reiterated its FY26E full-year shipment guidance of 200GWh, with EV and ESS batteries each expected to account for 50%. Meanwhile, management noted that near-term capacity constraints remain in 2026, meaning that subsequent growth will depend not only on demand but also on whether capacity ramp-up can keep pace with orders and shipment plans. For FY27E, management expects total shipment volume to grow by more than 50% YoY, including growth of more than 60% for EV batteries and 40% to 50% for ESS batteries. Growth in passenger-vehicle batteries will also be supported by higher volumes of large cylindrical batteries: related demand is expected to reach 40GWh in 2027E, compared with shipment volume of 10GWh in 2026E. Nomura therefore views the ramp-up of large cylindrical batteries as an important driver of EV battery shipment expansion in the next phase. In terms of valuation, Nomura uses an SOTP approach: it applies a 25x 2027F P/E multiple to the EV and ESS battery businesses and a 20x 2027F P/E multiple to the consumer battery business, while incorporating at the latest market value the company's 31% stake in Smoore International (6969 HK, not rated). This yields a target price of CNY 100, equivalent to 21x FY27F EPS of CNY 4.75; by comparison, the stock was then trading at 12x FY27F P/E. Based on the results, FY27E shipment growth expectations and segment valuation, Nomura maintains its Buy rating and CNY 100 target price, with the CSI 300 as the rating benchmark.

Analysis framework

The report first compares 1H26 and 2Q26 revenue and net profit with the previous profit alert, then analyzes changes in gross margin, net margin and battery shipments on both YoY and QoQ bases. It subsequently assesses the medium-term growth trajectory by considering management's FY26E shipment guidance, capacity constraints, FY27E growth expectations by business and demand for large cylindrical batteries. Finally, it derives the target price using an SOTP approach and business-specific P/E multiples, while incorporating the market value of the 31% stake in Smoore International.

Methodology notes

• Valuation methodologySOTP segment valuation

  SOTP segment valuation

  The report separately estimates the value of the EV and ESS battery businesses and the consumer battery business, then adds the value of the company's 31% stake in Smoore International to derive the overall target price.

• Valuation methodologyPE/PEG valuation

  Business-specific 2027F P/E valuation

  The report applies a 25x 2027F P/E multiple to the EV and ESS battery businesses and a 20x 2027F P/E multiple to the consumer battery business, while comparing the target price's implied 21x FY27F P/E with the stock's then-current 12x FY27F P/E.

• Industry/sector analysis frameworkVolume-price decomposition

  Analysis of shipment volume, average selling prices and revenue mix

  The report uses battery shipment volume to measure business-scale growth and attributes the QoQ improvement in 2Q26 gross margin to better average selling prices and an optimized revenue mix, explaining performance changes from the perspectives of volume, price and mix.

• Company fundamentals and financial framework

  YoY and QoQ margin analysis

  The report compares both YoY and QoQ changes in gross margin and net margin to distinguish pressure relative to the prior-year period from marginal improvement relative to the previous quarter.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• EVE Energy (300014 CH)

  The core company covered in the report; its 2Q26 results were in line with expectations, and Nomura maintained its Buy rating and CNY 100 target price.

  Strengths

  Revenue, net profit and battery shipment volume all achieved rapid growth; management expects total FY27E shipment volume to grow by more than 50%, while large cylindrical batteries are expected to support expansion in passenger-vehicle batteries.

  Weaknesses

  2Q26 gross margin remained down 2.9 percentage points YoY, and management noted near-term capacity constraints in 2026.

  Comparison

  The report did not provide operating-metric comparisons with specific battery companies; in valuation terms, the target price corresponds to 21x FY27F P/E, while the stock was then trading at 12x FY27F P/E.

  Risks

  Aggressive EV battery capacity expansion could lead to oversupply, price competition among domestic and overseas battery manufacturers could intensify, and tighter regulation of China's e-cigarette market could also affect the valuation contribution from the stake in Smoore International.

Key data

• 1H26 revenueCNY 45.7bnUp 62% YoY, slightly above the approximately 60% growth indicated in the previous profit alert
• 2Q26 revenueCNY 25bnUp 63% YoY and 21% QoQ
• 1H26 net profitCNY 3.3bnUp 106% YoY, near the upper end of the 95% to 110% growth range in the profit alert
• 2Q26 net profit growthUp 268% YoYUp 28% QoQ
• 2Q26 gross margin14.5%Down 2.9 percentage points YoY and up 0.5 percentage points QoQ
• 2Q26 net margin7.4%Expanded by 4.1 percentage points YoY and 0.4 percentage points QoQ
• 1H26 total battery shipment volume80GWhUp 60% YoY
• 1H26 EV battery shipment volume36GWhUp 66% YoY
• 1H26 ESS battery shipment volume44GWhUp 55% YoY
• FY26E shipment guidance200GWhManagement maintained its original guidance, with EV and ESS batteries each accounting for 50%
• FY27E total shipment growth expectationMore than 50% YoY growthIncluding growth of more than 60% for EV batteries and 40% to 50% for ESS batteries
• 2027E demand for large cylindrical batteries40GWhCompared with 2026E shipment volume of 10GWh
• Target priceCNY 100.00Maintained
• FY27F earnings per shareCNY 4.75The target price corresponds to 21x FY27F P/E
• Then-current FY27F P/E12xThe stock's trading valuation stated in the report
• Closing priceCNY 55.40As of August 19, 2026
• Rating benchmarkCSI 300The stock-rating comparison benchmark used in the report

Impact & implications

The report believes that strong growth in revenue, net profit and battery shipments validates the company's current expansion momentum, while the sequential improvement in gross margin and rise in net margin also indicate a marginal recovery in profitability. Near-term capacity constraints may affect the pace of shipments, but expected total shipment growth of more than 50% in FY27E and the expansion of large cylindrical battery demand from 10GWh in 2026E to 40GWh in 2027E support subsequent growth. The segment valuation supports Nomura's maintained Buy rating and CNY 100 target price.

Risks

• Aggressive capacity expansion could result in an oversupply of EV batteries and impede achievement of the target price.
• Price competition among domestic and global battery manufacturers could intensify further.
• Tighter regulation of China's e-cigarette market could affect the value of the company's stake in Smoore International.

What to watch

• Whether the FY26E full-year shipment guidance of 200GWh can be achieved and whether the targeted mix of 50% EV batteries and 50% ESS batteries can be realized.
• Progress in easing near-term capacity constraints in 2026 and their impact on the pace of shipments.
• Whether the FY27E target of more than 50% growth in total shipment volume can be achieved, including growth of more than 60% for EV batteries and 40% to 50% for ESS batteries.
• Whether large cylindrical batteries can ramp smoothly from shipment volume of 10GWh in 2026E to demand of 40GWh in 2027E.