Sungrow: Thunderstruck from the Ground Up, Energy Storage Booming, Is Sunshine "Cooling Off"?

On the evening of March 31, 2026,$ 阳光电源(300274.SZ) announced its 2025 Q4 report. The Q4 results were far below expectations: revenue growth stalled, and profits suffered a dramatic, cliff-like decline. The energy storage systems business was the core drag behind the “disaster” in performance:
1) Revenue in Q4 was massively below expectations, with total revenue posting its first year-over-year decline since 2022: Q4 total revenue was 22.8 billion yuan, down 18% year over year, far below the market expectation of 30.6 billion yuan. The key factors behind the performance “blow-up” came from the energy storage systems business.
By business segment:
a. Energy storage revenue plunged sharply, with volume growth and price declines moving in opposite directions in a serious mismatch: Energy storage revenue in Q4 was 8.49 billion yuan, down 22% year over year and down 23% quarter over quarter.
From shipment volume, Q4 energy storage system deliveries were 14GWh (up sharply about 40% quarter over quarter), while full-year deliveries were 43GWh (up 52% year over year). The company strategically abandoned low-margin domestic business, while overseas remained the absolute focus (Q4 overseas shipments accounted for as much as 86%).
From unit pricing, the Q4 selling price fell sharply to about 0.6 yuan/Wh, down about 45% from Q3. In addition to the time lag between shipment and the revenue-recognition timeline, Dolphin Jun believes the core reason was that overseas competition had materially intensified, forcing “price-for-volume,” and that shared tariff costs also weighed on apparent revenue.

b. Photovoltaic inverters faced overall pressure, with strategic focus fully shifting to overseas: In Q4, photovoltaic inverter revenue was 7.74 billion yuan, down 4% quarter over quarter. Due to the policy suppression of domestic return expectations under “Document No. 136” and the company’s decision to proactively give up negative-margin projects, the domestic rush to install solar power subsided. Q4 shipment volume was only 33GW, while full-year total shipments were 143GW (down 3% year over year).
However, benefiting from the rise in the share of high-value overseas shipments (reaching 56% for the full year), the average shipment price did not fall—in fact it increased. It rose 10% year over year to 0.22 yuan/W, stabilizing the company’s fundamental position.
c. Power station investment development: a single-quarter spike, with full-year results still constrained by policy pressure: In Q4, revenue from this business was 5.26 billion yuan. Affected by the concentrated rush of grid-connection deliveries and acceptance at year-end, revenue jumped 81% quarter over quarter. But looking at the full year, revenue was 13.2 billion yuan, down 21% year over year. The core reason was that “Document No. 136” increased uncertainty about the long-term returns (IRR) of photovoltaic power stations, directly weakening downstream investment and construction demand.
2) Q4 gross margin collapsed sharply, as business-structure deterioration combined with cost backlash:

In Q4, gross profit was 4.2 billion yuan, down 32% year over year; the overall consolidated gross margin fell sharply from about 36% in Q3 to around 23%. The main reasons for the large contraction in gross margin were:
a. Structural drag: low-margin power station development business (EPC) saw concentrated revenue recognition at year-end. Its share in Q4’s total revenue portfolio rose by 10 percentage points quarter over quarter to 23%, directly dragging down the overall gross margin.
b. Energy storage gross margin took a major hit: facing intensified overseas price competition and tariff shared-cost burdens, along with the combined effect of upstream lithium carbonate price increases plus “closed contracts” that could not be smoothly passed through to downstream customers, the triple squeeze pushed the energy storage gross margin down to 33.4% in the second half.
c. Slight contraction in photovoltaic inverter gross margin: faced with inflation pressure in key raw materials such as copper, IGBTs, and aluminum, profit space was eroded, causing the inverter gross margin to fall 2.1 percentage points quarter over quarter in the second half. From a regional perspective, even after overseas revenue share rose to 63% in the second half, consolidated gross margin still sank, confirming that competitive pressure in overseas high-premium markets had materially increased.
3) Q4 operating profit and net profit both crashed, as rigid spending met concentrated impairment charges:

In Q4, net profit attributable to shareholders fell 54% year over year to 1.6 billion yuan. The single-quarter net profit margin crashed by 11.2 percentage points to only 6.9%. The main reasons were:
Due to revenue slowdown combined with outbound expansion and “rigid expenditures” from new business, the downside leverage amplified sharply in the opposite direction. To build up the “third growth curve,” the company ramped up AIDC power and next-generation energy storage technology, and Q4 R&D expenses rose 31.3% year over year to 1.03 billion yuan; to lay the groundwork for a global network, selling expenses were nearly 1.3 billion yuan, up 32% year over year. With gross margin dropping sharply and costs remaining high on both sides, Q4 operating profit plunged nearly 60% year over year.
Secondly, in Q4 the company confirmed impairment losses and credit impairment losses of as much as 900 million yuan (up nearly 600 million yuan quarter over quarter). This mainly came from impairment of power stations in Vietnam and in the domestic market that had not been started for a long time, as well as inventory write-down provisions of about 200 million yuan forced by intensified competition—again dealing a blow to apparent profits.
Dolphin Jun’s comments:
Overall, Yangguang Power’s performance in Q4 2025 can be described as “severe.” Even though the global energy storage industry was still in a strong boom cycle with over 70% high growth, the company—unusually—fell into revenue stagnation, with both gross margin and net margin taking cliff-like dives.

More fatally, the energy storage systems business—which is the absolute core of market valuation and has replaced photovoltaic inverters as the largest revenue pillar—suffered a “Waterloo”-style single-quarter collapse in Q4. The near “halving” of apparent energy storage unit prices combined with a major slide in gross margin not only dragged overall Q4 performance into trouble, but also shook the market’s confidence in the logic of the “overseas high-premium moat” that the company prides itself on.
Facing the collapse in both unit prices and profits, management tried to attribute it to apparent or occasional factors (such as the high base from confirming revenue of a large project in the UK in Q3, the increased share of lower-price regions in the domestic market and the Middle East/Americas in Q4, and year-end settlement of after-sales service and rebates). However, against the backdrop of overseas revenue share rising rather than falling in Q4, unit prices and gross margin still deteriorated sharply. This may more reflect that the extreme domestic energy storage overcompetition is being transmitted to overseas in a substantial way, with competitive pressure in overseas markets heating up rapidly.
And under pressure, Yangguang Power may already have adopted a defensive concession—cutting prices to win orders—in high-value overseas regions. The sharply shrinking unit price this quarter, the worsening gross margin level, and the inventory write-down provisions forced by intensified competition all confirm this pessimistic trend.

If this “overcompetition spilling over overseas” trend is continuously validated by the coming performance, Yangguang Power’s prior valuation premium will be greatly discounted. The “double moat” the company built in overseas markets—“technological leadership + brand premium”—will face a risk of being breached. Under a pessimistic scenario, if the company cannot quickly widen the gap through technology differences, it is highly likely it will face a “double kill” of losing market share and falling unit prices—driving market panic after this set of financial results.
Looking at 2026 from the current point in time, the energy storage industry chain may also be facing a dual test of both demand watch-and-wait behavior and cost backlash:
Industry slowdown: Influenced by a wait-and-see sentiment triggered by major upstream raw material price increases (some projects may be deferred to 2027), the company has lowered its 2026 global energy storage market growth expectation from the previously given 40%-50% to 30%-50%.
Shipment guidance from the company: Against this backdrop, Yangguang Power’s 2026 energy storage shipment target is still planned as an aggressive growth of about 40%-50% (rising from 43GWh in 2025 to 60-65GWh). In terms of regional distribution, except for weak growth in the Middle East and Africa, the China market is expected to record some growth; the Americas are expected to grow 22%-35%; Asia-Pacific and Europe are expected to grow at similar rates. Meanwhile, management emphasized that in 2026 the company will still adhere to the bottom-line strategy of “focusing on profitable projects.”

But despite the strong shipment guidance the company has provided, Dolphin Jun believes Yangguang Power’s core fundamentals in 2026 will face two severe risks:
① “volume-price games,” with potential for energy storage revenue not to grow despite incremental volume
Even if the 2026 energy storage shipment volume can achieve the planned 40%-50% growth as scheduled, if overseas competition keeps deteriorating, the “collapse in prices” will completely consume the “volume growth dividend.”
In the most pessimistic case, assuming that the 2026 unit price of energy storage systems can only barely remain at this year’s Q4 level of 0.61 yuan/W (meaning unit price falls sharply by about 30% year over year), then even if shipments meet targets, the energy storage business’s revenue growth rate would crash from 49.4% in 2025 to a tiny 3.2% in 2026. This means that the energy storage business—an absolute “growth engine” for the company—will essentially stall in apparent revenue terms.
② A surge in lithium carbonate rebounds and backfires, with cost pass-through obstructed and gross margin hit again
On the gross margin front, the company is being squeezed from both upstream and downstream:
Backlash from existing orders: Many fixed-price contracts the company signed earlier lacked a “lithium carbonate price linkage mechanism.” In the current cycle where lithium carbonate prices rise rapidly, the gross margin space of these closed contracts has been severely compressed—this is also one of the reasons gross margin in the energy storage business fell sharply this quarter.

New order price pass-through is difficult: Although management said “negotiating with downstream customers is painful, but we will keep working hard to push pricing to the end market,” under a buyer’s market where overseas overcompetition intensifies, it is extremely hard for newly signed contracts to pass 100% of surging costs down to downstream customers.
Assuming the lithium carbonate price midpoint rises to the 140k-230k yuan/ton range, if costs can only be shared with downstream customers (i.e., 50% pass-through), it would cause a heavy drag of about 3 to 7 percentage points on Yangguang Energy’s overall energy storage gross margin; if competition deteriorates extremely and results in 0% pass-through, the profit drag would double (negative impact of 6%-14%). Only in an extremely ideal 100% full pass-through scenario could the existing profitability level be maintained.
Therefore, although Yangguang Power’s market value has retreated from an over 400 billion yuan peak after the Q3 report to around 279.2 billion yuan today (a drawdown of 36% within the range), much of this decline is more about digesting the “blow-up risk” in the Q4 report.
Looking ahead, if “intensifying overseas competition + domestic overcompetition spilling over overseas” becomes a long-term fact, and combined with the rigid gross-margin drag from lithium carbonate price increases, the current valuation pullback may not yet fully price in the most pessimistic expectations of a “double kill” in volume and price in 2026. There is even a risk that 2026 profits could decline year over year.

Therefore, Dolphin Jun believes it is still too early to conclude that the “risk of Yangguang Power has cleared.” Before the core energy storage profit engine stabilizes, it is still necessary to patiently wait for at least one more quarter of performance to verify its overseas pricing power and profitability floor.
The following is the main body:
I. Q4 total revenue growth flat quarter over quarter, down 18% year over year
In Q4, total revenue was 22.8 billion yuan. This was the first time since 2022 that year-over-year growth turned negative (-18%), which was far below the market expectation of 30.6 billion yuan. The core drag behind the performance “blow-up” came from the energy storage systems business:
1. Energy storage business revenue fell sharply:
In Q4, energy storage business revenue was 8.49 billion yuan, down 22% year over year and down 23% quarter over quarter, also far below the market expectation of 13.25 billion yuan. The core reason is that the selling price of energy storage systems was nearly “cut in half”:

a. Volume up: strategic shift away from domestic, overseas remains the absolute focus. In Q4, energy storage system shipment volume reached 14GWh, continuing a substantial increase of about 40% compared with Q3 (10GWh). Among this, overseas shipments were nearly 12GWh (accounting for as much as 86%), while domestic shipments were only 2GWh (accounting for less than 14%).

Looking at the full year of 2025, total energy storage shipments were about 43GWh (domestic 7GWh, down 26% year over year; overseas 36GWh, up 92% year over year). Overall, shipments grew 52% year over year, consistent with the company’s earlier guidance for 25-year shipments of 40-50Gwh.
However, this growth rate was below the global energy storage installed capacity growth rate of 74% (about 317GWh for the full year). The main reason was that, for profitability considerations, the company strategically shrank its low-margin domestic business (gross margin only about 10% and net profit negative), shifting resources toward high-value overseas projects.
As a result, Yangguang Energy’s overseas market share for energy storage systems increased by 3.6 percentage points year over year to 26% in 2025; however, due to domestic drag (market share fell 5.8 percentage points to 3.9%), the full-year global combined market share declined by about 2 percentage points to 13.6%.
Dolphin Jun believes that Yangguang Power’s strategic abandonment of low-margin markets and focus on high-value overseas projects is directionally correct. But the key prerequisite is that the company must, relying on “technical barriers and brand premium,” successfully defend overseas market share and high unit price/gross margin levels.
b. Selling unit price (price decline): the main driver is a collapse in the apparent average price

If we roughly estimate based on the Q4 shipment volume of 14GWh, the unit price for energy storage systems in that quarter fell sharply to about 0.6 yuan/Wh, down about 45% from Q3’s 1.1 yuan/Wh.
Regarding the unit price decline, the company’s management explanation is: ① the high base effect from confirming revenue of a large UK project in Q3; ② an increased share of revenue from domestic and low-price regions in the Americas in Q4; and ③ year-end concentrated settlement of after-sales costs and channel rebates.
But given that in Q4 the shipment mix still relies primarily on overseas (86% share):
①: there is a large time lag between shipment and revenue-recognition criteria
Among the 14GWh shipment volume in Q4, there may be many projects that have been shipped but have not yet reached the revenue-recognition stage (such as projects in transit by sea, or those not yet completed with grid-connection acceptance), which directly leads to the apparent calculated unit price being distorted to a level that looks like a severe collapse. If it is indeed due to this reason, it may be acceptable to the market.
②: overseas competition has materially intensified, leading to “price-for-volume”
The extreme overcompetition in domestic energy storage may be substantively transmitted overseas, forcing Yangguang Power to cut prices to seize orders.
If this trend is confirmed, the company’s investment logic would be greatly discounted. The “technology leadership + brand premium” moat it originally had when facing a price-neutral overseas market would be increasingly weakened. In a pessimistic scenario, future market share and unit prices may face another double hit, which is also the point most concerned by the market after this earnings report.

(Note: The company responded that terminal competition is indeed fierce, but it can still follow a differentiated route by relying on its supply chain and technological innovation, and that overseas customers value long-term service, with expectations that future prices will remain basically stable.)
③ Tariff-cost shared arrangements erode profit margins
The company needs to share with customers the additional costs caused by changes in U.S. tariffs. As management previously disclosed, this “tariff sharing” arrangement is expected to have a negative impact of about RMB 500 million on 2025 net profit. This also dragged down the Q4 revenue-recognition amount and profit level.
2. Photovoltaic inverters: overall shipments are dragged down by a lower domestic profit outlook; strategic focus fully shifts to overseas
In Q4, photovoltaic inverters achieved revenue of 7.74 billion yuan, with a slight 4% quarter-over-quarter decline, significantly below the market expectation of 9.4 billion yuan. The core drag behind the underperformance versus expectations also lies in shipments being far below guidance:
a. Shipments below expectations: In Q4, inverter shipment volume was only 33GW, down 3% quarter over quarter, far below the market expectation of 54GW.
For full year 2025, total shipments were about 143GW, down 3% year over year, also far below the company’s previously provided full-year guidance of 160-180GW.

The year-over-year decline in overall shipments mainly came from weakness in the domestic market. In 2025, domestic shipments were only 63GW (down 17% year over year), and domestic market share fell sharply by 7.3 percentage points to 19.9%. Meanwhile, in the overseas market, shipment volume grew 12% year over year and overseas market share rose slightly by 1 percentage point to 40.8%. Ultimately, due to contraction in the domestic base, Yangguang’s global consolidated PV inverter market share fell 4.2 percentage points year over year to 27.9%.
And Dolphin Jun believes Yangguang’s sharp decline in domestic PV inverter shipments is mainly due to:
Policy: With “Document No. 136” taking effect, the guaranteed purchase electricity price was canceled and replaced with fully implementing market-based electricity pricing. This rule change led to a near-term drop in expected returns for domestic PV projects, and a sharp increase in uncertainty about investment returns, directly suppressing downstream installation demand. As a result, the traditional domestic rush to install in Q4 retreated significantly.
Strategy: the company actively “gives up volume to protect price,” and management also acknowledged that the domestic household market shrank significantly and that the company strategically chose to proactively give up some “negative-margin” overcompetitive projects. The logic is similar to that of the energy storage business: Yangguang Power is shifting resources and focus across the board to high-value overseas markets.

b. Shipment average price: optimized shipment mix supports stability in the overall average price
Although volume faced pressure, on the price side the company managed to stabilize its fundamental base by optimizing the mix with an “overseas-led” structure.
If we roughly estimate using the “shipment volume equals revenue recognition volume” approach, the Q4 average PV inverter price was about 0.23 yuan/W, only slightly down 1.3% versus Q3’s 0.24 yuan/W, so overall unit prices remained basically stable.
Looking across the full year of 2025, thanks to a significant increase in the share of high-margin overseas shipments (up 7 percentage points year over year to 56%), the full-year average shipment price rose rather than fell, achieving a 10% year-over-year increase to about 0.22 yuan/W.
3. Power station investment and development: year-end concentrated revenue recognition boosted Q4 apparent revenue; full-year performance constrained by policy throughout the year
In Q4, Yangguang’s power station investment and development business revenue was 5.26 billion yuan, up 81% quarter over quarter. This may mainly be due to cyclical fluctuations inherent in engineering construction-type businesses (EPC/BT models). Constrained by grid-connection acceptance assessment nodes near year-end, many photovoltaic and energy storage power station projects were completed, delivered, and passed grid-connection acceptance in a concentrated way in Q4, creating a year-end “concentrated revenue recognition” tailwind effect.

But for the full year of 2025, revenue was 13.2 billion yuan, down 21% year over year. The major drag still came from cooling in domestic photovoltaic power station construction.
As related policies such as “Document No. 136” are implemented more deeply, new energy projects are required to fully participate in market-based electricity trading. The previous mechanism of guaranteed purchase electricity prices was broken. This rule change greatly increases uncertainty in the long-term return expectation (IRR) of photovoltaic power stations, directly weakening downstream developers’ investment and construction incentives, thereby suppressing overall starts and construction demand.
From a business-model perspective, power station investment and development (mainly EPC and BT modes) has typical “heavy assets, capital-intensive” characteristics. Its industry boom cycle is tightly tied to downstream PV/energy storage macro-installed-capacity demand, showing strong cyclicality.
Constrained by intense market competition and engineering attributes, this business’s gross margin has long stayed at a low level (in the second half of 2025, gross margin fell 7 percentage points quarter over quarter to only 11%). Therefore, although it occupies a certain scale in total revenue, it is not the core engine driving the company’s overall profit growth and valuation premium.

II. Gross margin: business-structure deterioration combined with cost backlash, with profitability hit hard
In Q4, the company achieved gross profit of 4.2 billion yuan, down sharply 32% year over year; overall gross margin fell cliff-like from about 36% in Q3 to around 23%. Due to Q4’s quarterly drag, the company’s overall gross margin in the second half of 2025 fell nearly 5 percentage points quarter over quarter to 29.4%.
Dolphin Jun believes the rapid gross margin contraction in this quarter results from both “apparent structural drag” and “material damage to core business performance.” Specifically:
1. Energy storage systems gross margin collapsed:
The energy storage business was the cornerstone supporting the company’s high gross margin and revenue high growth in the earlier stages, but its gross margin has already fallen from about 40% in the first half of 2025 to 33.4% in the second half, down 6.6 percentage points. The profit pressure in Q4 was even more severe. Dolphin Jun believes potential reasons for the plunge in energy storage gross margin include:
① Price-side: Overseas competition has materially intensified, and the high-margin moat is starting to loosen
In response to the gross margin drag from a sharp unit price decline, the company’s official explanation attributes it to: the high base effect from confirming revenue of a large UK project in Q3; a staged increase in the share of revenue from domestic, Middle East, and Americas low-price regions in Q4; and the concentrated settlement of after-sales service and rebates toward year-end.

But in fact, with the shipment mix in Q4 still dominated by overseas (86%), the energy storage systems overall gross margin still deteriorated materially quarter over quarter. This may reflect a harsher reality: competition pressure in overseas energy storage markets is materially increasing. To seize or maintain market share, the company also had to concede on pricing in high-value overseas regions; “price-for-volume” directly pierced through the gross margin defense line.
② Policy-side: “tariff cost sharing” clauses directly erode the profit safety cushion
The company must share with overseas customers the additional costs from changes in U.S. tariffs. This tax expense could not be passed through smoothly to downstream customers, and as direct friction costs it also directly consumed gross margin space in both Q4 and the full year (the company previously estimated that the annual impact on 2025 profit would be 500 million).
③ Cost-side: lithium carbonate rebound and the mismatch of “closed contracts” backfire
As upstream lithium carbonate prices recovered and the price center rose, battery cell procurement costs increased again. However, as an energy storage systems integrator, many overseas long-term orders the company previously signed were not accompanied by a flexible “raw material price linkage mechanism” with downstream customers; instead, they used fixed unit price “closed contracts.”

This pricing-mechanism mismatch means that during performance the company cannot pass upstream price pressure to downstream customers, so it can only absorb the pressure passively itself—thereby compressing gross margin significantly.
2. PV inverters: gross margin in the second half also saw a slight contraction
In the second half of 2025, Yangguang Power’s photovoltaic inverter business gross margin fell about 2.1 percentage points quarter over quarter to 33.6%. The divergence of “average unit prices rising but gross margin contracting” may be due to:
Although the shipment average price of Yangguang inverters rose quarter over quarter due to mix optimization (higher share in high-value overseas markets, up 17% to 0.24 yuan/W), increases in the costs of key upstream raw materials eroded profit space.
At the same time, the PV industry chain faced upward pressure in raw material prices including copper, IGBTs, aluminum, and silver. These cost increases were likely the main reason leading to the quarter-over-quarter gross margin contraction in inverters, but the magnitude of its gross margin reduction (-2.1 ppt) was far smaller than that of the energy storage systems (-6.6 ppt).
3. Structural drag: low-margin power station development business (EPC) saw concentrated revenue recognition at year-end

As mentioned earlier, Q4 saw a year-end rush of grid-connected deliveries and acceptance for the power station investment and development business with heavy assets and low margins, causing a blowout 81% quarter-over-quarter surge in single-quarter revenue.
The spike in the revenue side directly caused the share of this low-margin business within Q4’s total revenue to rise sharply by 10 percentage points quarter over quarter to 23%. At the same time, however, the combined revenue share of its core main businesses with relatively higher margins (PV inverters and energy storage systems) shrank sharply by 12 percentage points quarter over quarter to 71%. This deterioration in revenue mix also directly dragged down the overall consolidated apparent gross margin.
In addition, under the impact of “Document No. 136” and electricity price marketization policies, downstream PV power station projects face extremely high uncertainty in long-term returns (IRR). The deterioration and caution in downstream investors’ return expectations is directly passed upstream into EPC construction, forming downward price pressure; this caused the gross margin of the power station development business in the second half of 2025 to fall sharply by 7.2 percentage points quarter over quarter to a marginal-profit level of only 10.8%.
From the company’s revenue by region, when overseas revenue share continued to rise by 5 percentage points to 63% in the second half of 2025 (expected still driven by the company’s strategy to give up domestic focus and concentrate on overseas business), gross margin still sank significantly quarter over quarter. This may still reflect that competitive pressure in overseas high-premium markets has materially increased, and the previous high-margin premium is being eroded.

III. Operating profit and net profit both crashed
With the double blow of revenue-side stagnation and a cliff-like gross margin collapse, the company’s profit side suffered an unprecedented squeeze. The cliff-like drop in net profit this quarter is the combined result of: “core business profitability damaged,” “rigid expense levels,” and “concentrated impairment charges recognized toward year-end”:
Expense-side: outbound expansion and new business expansion bring “rigid spending,” amplifying the downside leverage sharply in reverse
In Q4, the company’s total four-period expenses were 2.94 billion yuan, basically flat quarter over quarter compared with the previous quarter (2.92 billion yuan). But viewed over a longer dimension, against the backdrop of revenue growth stalling at the front end, high expense spending led to the company suffering a serious “reverse operating leverage” backlash:
R&D expenses (heavy bets on the “third growth curve”): In Q4, R&D expenses reached 1.03 billion yuan, up sharply 31.3% year over year (starting a strong upward trend from Q2 2025). This strategic investment mainly focuses on two frontier areas:
Securing the AIDC power blue-ocean: To enter the AI data center power market, the company set up a dedicated AIDC business unit (the R&D team size has reached nearly 50 people and continues to expand). It made heavy investments across full-stack products, including solid-state transformers (SST), rack-outside power supply systems (such as 800V HVDC), and rack-in power supplies (PSU, BBU), while also developing AIDC-specific energy storage systems with microsecond-level response. The company expects this business to achieve small-batch deliveries by end of 2026 and to begin large-scale expansion in the second half of next year (2027).

Next-generation energy storage technology iteration: The new generation energy storage system “PowerTitan 3.0” launched in 2025 first introduced cutting-edge technologies such as liquid-cooled SiC (silicon carbide) PCS to maximize power density. Upgrading the underlying technology also requires extremely high continuity of R&D “blood supply.”
Selling expenses (supporting its global ambitions): Q4 selling expenses were nearly 1.3 billion yuan, up 32% year over year.
In 2025, with total revenue increasing by only 15%, overseas revenue surged 49% year over year (while domestic revenue fell 15%). To serve this rapidly growing overseas base, the company is aggressively building global localized sales and service networks (in 2025, overseas employees exceeded 2,200 people, up 24.5%). Personnel expansion, localized operations, and deeper channel penetration directly pushed up the absolute value of selling expenses.
Incentive fund: In 2025, the company recognized nearly 1.0 billion yuan of talent incentive funds (with the single-quarter impact in Q4 around 100-200 million yuan), further adding to the cost burden for the period.**
With “gross margin dropping sharply” and “both R&D and selling expenses staying high” squeezing from both sides, operating profit (gross profit - period four expenses), which reflects the profitability of the company’s core businesses, was only 2.18 billion yuan in Q4. Year over year and quarter over quarter both fell by nearly 60% and 58%, respectively—setting the largest single-quarter decline in recent years.

Besides the worsening at the operating level, the major impairment charges recognized toward year-end further dragged down apparent net profit:
In this quarter, the company confirmed asset impairment and credit impairment losses of as much as 900 million yuan (up nearly 600 million yuan quarter over quarter). This mainly came from: ① impairment charges for power stations in Vietnam and domestic power stations that had long been not started; ② as overcompetition intensified within the industry, the company recorded inventory write-down provisions of about 200 million yuan.
Under the cumulative pressures above, Q4 net profit attributable to shareholders ultimately recorded only 1.6 billion yuan, down sharply 54% year over year; the single-quarter net profit margin showed a cliff-like plunge, contracting by nearly 11.2 percentage points quarter over quarter to only 6.9%.