IPO Prospects｜Zhengtai Electric's Hong Kong IPO: The joys and worries behind the 100 billion revenue “A+H” layout

Under the grand narrative of the accelerated transformation of the global energy structure to a cleaner and more intelligent environment, the power equipment and new energy industry is facing unprecedented development opportunities. The upgrading of smart grids, the desire for electricity in AI data centers, and the promotion of “dual carbon” goals together form the core driving force for the industry's growth.

Recently, Zhejiang Zhengtai Electric Co., Ltd. (hereinafter referred to as “Zhengtai Electric”), which has been in the A-share market for 16 years, officially submitted a listing application to the main board of the Hong Kong Stock Exchange, seeking a “A+H” listing. The co-sponsors are CICC, Huatai International, and Guotai Junan Securities.

So what highlights did Zhengtai Electric bring about by breaking through the Hong Kong Stock Exchange this time? Let's look at the fundamentals first.

“Smart appliances+green energy” two-wheel drive

The Zhitong Finance App notes that Zhengtai Electric's business is divided into two major segments: smart appliance products and green energy solutions.

Among them, in the field of smart appliances, Zhengtai Electric plays the role of a “safety guard” for power systems. As a leading company in the global low-voltage electrical appliance market, its products cover the entire value chain from power generation, storage, and distribution to terminal use. According to Frost & Sullivan's report, in 2025, Chentai Electric ranked fifth in the global low-voltage electrical appliance market, steadily ranked second in the Chinese market, and is the largest low-voltage electrical enterprise in China. The company not only has a huge distribution network covering 265 prefecture-level cities across the country, but also extends its business reach to more than 50 countries and regions around the world through overseas production bases in Southeast Asia, West Asia and Africa. With industrial upgrades and the explosion of demand for intelligent power distribution in AI data centers, Zhengtai Electric is promoting the transformation of products to digitalization and intelligence to consolidate its market barriers.

In the field of green energy, Zhengtai Electric has built a business model covering the entire life cycle of “development - construction - operation - transfer”. The company is not only a global leader in the field of household photovoltaics — by the end of 2025, its total installed capacity of household photovoltaics reached 58.0 gigawatts, ranking first in the world, with a market share of 12.8%; it also provides EPC services, inverters and energy storage system sales. This “rolling development” model, that is, after building photovoltaic power plants, they are sold to third party investors to return capital or operate on their own to obtain long-term power generation benefits, giving them a unique competitive advantage on the new energy circuit

Through the two-wheel drive of “smart appliances+green energy”, Zhengtai Electric has formed a closed loop in the complete value chain from power generation, storage, and distribution to terminal electricity use. This strategic layout is intuitively mapped in its financial statements.

Behind the fluctuation in revenue: “Profit growth does not increase revenue”

Looking at the core financial indicators of recent years, it can be seen that the company is in a critical period of business restructuring.

Through the financial data disclosed in the prospectus, we can clearly see the business context and structural changes of this company over the past three years. In 2023, 2024, and 2025, the company's revenue was 57.251 billion yuan (RMB, same below), 64.524 billion yuan, and 59.167 billion yuan, respectively, showing a fluctuating curve of increase first and then decline. Revenue declined by about 8.3% year on year in 2025, but net profit attributable to shareholders of listed companies continued to rise from 3,686 billion yuan in 2023 to 4.501 billion yuan in 2025, up 16.19% year on year.

The core driving force behind the contrarian increase in profit is the continuous improvement of gross margin: from 21.6% in 2023 to 23.1% in 2024, to 25.9% in 2025, mainly due to the optimization and adjustment of the business structure. The Zhitong Finance App notes that revenue from power plant engineering contracting business with low gross margin plummeted from 6.02 billion yuan in 2024 to 1.72 billion yuan in 2025, accounting for a sharp drop, while revenue from power plant operation and maintenance business with a gross margin of 53% increased from 7.88 billion yuan to 11.06 billion yuan, and inverter and energy storage sales also achieved a 45% revenue increase. This phenomenon of “increasing profits without increasing revenue” is essentially the result of the company actively optimizing its business portfolio.

Since entering 2026, there has been a marked shift in growth momentum. In the first half of the year, the company achieved revenue of 38.064 billion yuan, a sharp increase of 28.46% over the previous year, but this high growth was mainly driven by the volume of the household photovoltaic business — Zhengtai Energy contributed 22.62 billion yuan in revenue and 2,438 billion yuan in net profit in the first half of the year, adding more than 5 gigawatts of installed capacity. In contrast, the revenue of the traditional smart appliance industry increased by only 3.62% during the same period, and growth was weak. Changes in the business structure directly lowered the overall gross profit margin: gross margin for the first half of 2026 fell by about 2.3 percentage points to 23.6% compared to the full year of 2025, and declined by about 4.6 percentage points from the same period last year.

Excluding the non-recurring profit and loss contribution of 269 million yuan, the year-on-year growth rate of deducted non-net profit in the first half of the year was only about 6.35%, and the real profitability was clearly under pressure. From a longer-term perspective, the company's net profit margins for the past three years were 8.6%, 8.1%, and 10.4%, respectively, and 10.7% in the first half of 2026. The overall trend showed a steady upward trend, but this improvement was more dependent on passive adjustments in the business structure than on the increase in the profitability of each business itself.

The other side of the financial situation is rising debt pressure. From 2023 to 2025, the company's balance ratio rose from 61.5% to 63.3% and then to 66.1%. Although it fell slightly to 64.7% at the end of June 2026, the absolute level is still high. By the end of June 2026, the company's total interest-bearing liabilities were close to 50 billion yuan, far exceeding the monetary capital for the same period; short-term loans and non-current liabilities maturing within one year totaled about 24.5 billion yuan, while monetary capital was only about 15.7 billion yuan. The short-term debt coverage gap cannot be ignored. High financial expenses are eroding profits. Financial expenses for the first half of 2026 reached 1,299.6 billion yuan, an increase of 53.7% over the previous year, almost eating up nearly one-third of the operating profit growth space during the same period. However, it is worth noting that operating cash flow performance is still steady. Net cash flow from operating activities reached 23.1 billion yuan in 2025 and 13.2 billion yuan in the first half of 2026, providing a certain margin of safety for debt repayment and business expansion.

With the high growth of the industry, opportunities and risks coexist

From an industry perspective, the circuit where Zhengtai Electric is located has broad room for imagination.

In the field of low-voltage electrical products, according to the Frost & Sullivan report, the global market size grew from 415.5 billion yuan in 2020 to 463.5 billion yuan in 2025, with a compound annual growth rate of only 2.2%, which is a typical mature market, but it is expected to reach 580.4 billion yuan by 2030, and the compound annual growth rate from 2025 to 2030 is expected to rise to 4.6%. This acceleration trend is mainly driven by emerging demand such as smart grid upgrades, deep integration of new energy sources, and AI data centers. Among them, global data center capital expenditure is expected to increase from US$585 billion in 2025 to more than US$30 billion in 2030, and demand for intelligent low-voltage electrical products in modular power distribution, remote monitoring and active control is exploding.

In the field of new energy, the cumulative installed capacity of global photovoltaics surged from 741.4 gigawatts in 2020 to 2601.5 gigawatts in 2025, with a compound annual growth rate of 28.5%. It is expected to exceed 6,700 gigawatts by 2030. The cumulative installed capacity of lithium-ion battery energy storage systems soared from 32.9 gigawatt-hours in 2020 to 714.5 gigawatt-hours in 2025, an increase of more than 20 times over five years.

However, the other side of the opportunity is intense competition and potential risk.

The first is the dependency on policies and subsidies. Zhengtai Electric's green energy business is highly dependent on countries' new energy policies, electricity pricing mechanisms and subsidies. The prospectus clearly states that if there is an adverse change in policy or “power restrictions” due to insufficient grid consumption capacity, it will directly impact the operating income and asset transfer value of the power plant.

The second is supply chain and cost risk. Commodities such as copper and silver are core raw materials for low-voltage appliances, and price fluctuations directly affect gross profit. Although companies try to transfer costs through price increases, in a competitive market, bargaining power is not limitless.

Furthermore, there are hidden concerns about the operating model. In the household photovoltaic business, the company relies heavily on third-party service providers for roof development and installation. Although this asset-light expansion model is fast, it also poses quality control and compliance risks. Once the subcontractor has construction quality issues or irregularities, it will damage Zhengtai's brand reputation. Furthermore, the development of photovoltaic power plants requires huge capital advances. If assets cannot be transferred to downstream investors in a timely manner, the company will face huge inventory backlogs and capital occupation pressure.

As for the future, the strategic path of Zhengtai Electric is already clear. The current H share listing will focus on key directions such as smart appliance R&D and innovation, global production capacity layout optimization, and digital transformation, to provide capital support for the implementation of a “1+5” global marketing system that is deeply involved in mainland China and covers the five major overseas regions. The company is trying to replicate the deep advantages of the domestic industry to a wider range of overseas markets, and at the same time gradually transition from an equipment manufacturer to a comprehensive energy solution service provider by adding edge intelligence and system integration technology.

Overall, with the deep moats built up in the field of low-voltage appliances and household photovoltaics in China, it is difficult to shake the leading position of Zhengtai Electric in the industry in the short term. However, for this giant, which is about to enter the “A+H” era, its huge size not only means a barrier to scale, but also an implicit resistance to transformation brought about by growth inertia. While acknowledging the value of the circuit, investors still need to carefully observe the efficiency of corporate cash flow management, the actual results of the implementation of globalization, and the potential impact of changes in new energy policies. This listing in Hong Kong is not only a simple capital addition, but also a key breakthrough for Zhengtai Electric to consolidate its industry leadership in the deep-water zone of global energy transformation.