Can Shenghong Shares Revive Its Billion-Yuan Valuation Through AIDC Amidst Declining Energy Storage Business?

Recently, in the midst of the high demand for AIDC, Shenghong Co., a multi-faceted player in the renewable energy sector, has reported somewhat disappointing financial results. According to the company’s latest semi-annual report, it achieved operating revenue of 1.362 billion yuan in the first half of the year, representing a 4.79% year-on-year decline. Its net profit stood at 158 million yuan, down 12.91% compared to the previous year. This performance starkly contrasts with the strong figures from the first half of 2024, where revenue increased by 29.84% and net profit saw a slight uptick of 0.02%.

Additionally, in the first half of 2025, Shenghong’s net profit margin was 11.37%, a decrease of 1.16 percentage points from the 12.53% recorded in the first half of 2024. The decline in performance is primarily attributed to challenges in the energy storage sector. An investment banker noted, “Shenghong’s business development may have reached a turning point, especially in the areas of power quality equipment and energy storage. Last year, the first half had a significant baseline, and pressure began to appear in their energy storage business from the third quarter.” They explained that the modular energy storage PCS solutions lack cost advantages compared to centralized systems, and the domestic large-scale storage market is becoming increasingly concentrated among leading players. Shenghong’s customer base is relatively weak, and while they established an early presence overseas, domestic competitors are rapidly catching up.

However, the same source expressed optimism, stating, “We understand that Shenghong has strengthened its focus on centralized PCS product development since last year and is actively expanding its partnerships with major integrators. We may see breakthroughs starting in the third quarter.” Concurrently, while the energy storage segment is facing a downturn, Shenghong’s charging station business has experienced several successes. In 2024, the company partnered with BP, becoming one of the first charging station manufacturers on its list of suppliers in China. Their 1.2/1.44MW ultra-fast charging pile series supports a “one station, one pile, one shared” model, adaptable to multiple application scenarios, and has gained technical recognition. The financial report shows that the electric vehicle charging equipment segment generated approximately 632 million yuan in revenue, reflecting a 13.70% year-on-year increase, although its gross margin declined by 3.2% to 34.86%.

Currently, Shenghong is drawing attention for its operations in the AIDC sector. The financial report indicates that in the first half of 2025, the company’s power quality equipment business achieved revenue of 280 million yuan, marking an 11.4% year-on-year increase with a gross margin of 58.7%, up by 3.9% year-on-year. In recent years, Shenghong has repeatedly won bids or participated in significant projects for data centers and intelligent computing centers, including major domestic projects like the Shanghai Supercomputing Center, Dadong Data Center, and the Gansu Qingyang East Data West Computing telecommunications data center project, as well as international projects including a data center in Germany.

Shenghong is actively involved in overseas data center projects, with its products widely adopted in Chinese companies’ international data centers. According to a recent survey by Ge Wu Zhi Sheng on the competitive landscape of low-voltage power quality vendors in the data center sector, Shenghong has been recognized as a top-tier brand. “Although this sector currently shows moderate revenue growth, there has been an improvement in gross margin, likely driven by rising overseas AIDC demand,” the investment banker speculated. “Shenghong has long been focused on power electronics technology, and the next-generation power supply technology for data centers (HVDC) shares some technical roots with its existing business. They have also connected with some overseas clients through their APF business, suggesting significant potential for further business expansion.”

However, as the competition in the “AIDC + energy storage” space intensifies, the market is keenly observing whether Shenghong’s AIDC business can maintain its growth. Recently, Shuangdeng Co. reported that its sales revenue from AIDC data center batteries and systems surged by 113.1% year-on-year in the first half of this year, making it the company’s largest source of revenue. Additionally, Contemporary Amperex Technology Co. highlighted during its earnings briefing that high power consumption and stability requirements in data centers lead to a high demand for quality energy storage batteries, marking a promising market for future growth. Other companies like Sunshine Power have announced the establishment of AIDC divisions, aiming to launch related products next year.

As the data center energy storage market evolves, characterized by leading lithium battery manufacturers dominating, a trend towards diversification in technology, and rapid advancements from emerging companies, the competition landscape is becoming increasingly complex. Major players such as Contemporary Amperex, BYD, Shuangdeng Group, and Southern Power are securing core clients through scale, cost, and lifecycle service capabilities, while companies like Yiyuan Energy and Haicheng Energy focus on differentiated solutions for high-density or long-duration energy storage. Meanwhile, Huawei and Sunshine Power are entering this arena through integrated “solar-storage-charging” solutions or AI energy management.

In light of the increasing competition from industry giants, whether Shenghong can sustain growth in its AIDC business will be a focal point for market observers.