CATL splashes out 4.1 billion to indirectly invest in Zhongheng Technology. What is CATL planning?
CATL invests heavily with 4.1 billion yuan to aggressively expand its computational power and electricity synergy strategy
On April 8, Zhongheng Electric announced that CATL plans to strategically invest in its controlling shareholder, Zhongheng Technology Investment, through a combination of equity and cash.
Upon completion of the proposed capital increase, CATL will acquire 49% of Zhongheng Technology Investment's shares, thereby becoming an indirect shareholder of Zhongheng Electric.
It is reported that Zhongheng Electric, chosen by CATL this time, is a digital energy company focusing on the construction of a zero-carbon intelligent society. It maintains deep strategic partnerships with leading clients in various fields such as Alibaba, Tencent, Baidu, China Mobile, State Grid, and Sinopec.
Some analysts believe that CATL’s heavy investment in Zhongheng Technology Investment this time is driven by Zhongheng Electric’s leading position in areas such as high-voltage direct current (HVDC) power supply for data centers.
However, behind the光环, Zhongheng Electric faced a performance dilemma of 'increased revenue but not increased profit' in the first three quarters of last year. Additionally, Zhongheng Electric also faces challenges such as declining gross profit margins and rising asset-liability ratios.
Notably, in the 2026 Hurun Global Rich List revealed in March this year, Zhongheng Electric founder Zhu Guoding and his wife Bao Xiaoru ranked with a fortune of 7.5 billion yuan.
However, at the end of last year, Zhu Guoding was sentenced to three years in prison, suspended for four years, and fined 1 million yuan for manipulating the securities market.
CATL splashes out 4.1 billion to acquire shares, intensifying its strategic layout in computing and power synergy
On the evening of April 8, Zhejiang Zhongheng Electric Co., Ltd., a listed company on the A-share market, announced a significant development. The company's controlling shareholder, Zhongheng Technology Investment, along with its shareholders Zhu Guoding and Bao Xiaoru, signed a 'Strategic Investment Cooperation Framework Agreement' with CATL on the same day.
According to the agreement, CATL plans to subscribe for approximately 14.41 million yuan of additional registered capital in Zhongheng Technology Investment for about 4.1 billion yuan. The contribution will be made in cash and equity.
Among this, CATL intends to contribute 99.7% of its equity in Times Power Source, valued at 1.196 billion yuan, with the remaining amount to be paid in cash.
Tianyancha shows that Times Power Source was established in 2018 as a holding company of CATL. It is committed to building energy storage power electronics technology capabilities and product centers, empowering CATL’s zero-carbon business development.
As a leading provider of energy storage inverters (PCS) and AC-side system integration solutions within the industry, Times Power Source has long focused on the research and application of power electronics technology. Its product portfolio includes centralized energy storage inverters, string-type energy storage inverters, and integrated inverter step-up machines.
Prior to the proposed capital increase, the registered capital of Zhongheng Technology Investment was 15 million yuan, with Zhu Guoding and Bao Xiaoru holding 70% and 30% of the shares, respectively.
After the completion of the proposed capital increase, the registered capital of Zhongheng Technology Investment will change to approximately 29.41 million yuan, with corresponding changes in the equity structure. Zhu Guoding, Bao Xiaoru, and CATL will hold 35.7%, 15.3%, and 49% of the shares, respectively.
However, before and after the proposed capital increase, the controlling shareholder and actual controller of Zhongheng Technology Investment remain unchanged, still being Zhu Guoding, while the actual controller of the listed company Zhejiang Zhongheng Electric Co., Ltd. also remains unchanged.
As of the date of the announcement, Zhu Guoding directly and indirectly controls 40.12% of the shares of Zhejiang Zhongheng Electric Co., Ltd. through his control of Zhongheng Technology Investment, making him the actual controller. Zhu Guoding and his acting-in-concert party Bao Xiaoru collectively control 41.4% of the shares of Zhejiang Zhongheng Electric Co., Ltd.
Although the controlling shareholder and actual controller of Zhongheng Electric will not change, CATL will participate in the governance of the listed company.
According to the agreement, Zhu Guozheng and Zhongheng Technology Investment will promote a director candidate recommended by CATL to serve as a director of the listed company through exercising their shareholder rights and other means.
Chairman Bao Xiaoru of Zhongheng Electric will also promote a vice general manager candidate recommended by CATL to serve as the vice general manager of the listed company.
However, Zhu Guozheng and Bao Xiaoru do not form a concerted action relationship or joint control with CATL at the Zhongheng Technology Investment level and/or the listed company level.
It is reported that after this cooperation is reached, CATL and Zhongheng Electric will carry out business and strategic cooperation in areas such as green ICT infrastructure, transportation electrification, and new power systems (computing-electricity synergy) to integrate resource endowments and empower corporate development.
Following the announcement, the capital market quickly responded positively, with Zhongheng Electric's stock price surging limit-up for two consecutive days.
As of the close on April 10, Zhongheng Electric was trading at 35.12 yuan per share, with its total market value approaching the 20 billion yuan mark. Since the beginning of the year, the cumulative increase in Zhongheng Electric's stock price has exceeded 30 percent.
What does 'King Ning' aim to achieve by partnering with Zhongheng Electric?
Public information shows that Zhongheng Electric, which has established ties with 'King Ning,' was founded in 1996 as a digital energy company focused on building a zero-carbon intelligent society. It was listed on the Shenzhen Stock Exchange in March 2010.
Radar Finance learned that Zhongheng Electric has its headquarters in Hangzhou's High-tech Industrial Development Zone, and the company has set up scientific innovation platforms such as a 'National Postdoctoral Research Workstation.' It also operates R&D centers in Hangzhou, Beijing, Shanghai, and other locations.
After years of dedicated efforts, Zhongheng Electric has successfully developed a series of products including data center HVDC direct power supply systems, Panama power modules, 5G site power supplies, charging stations, and power digitalization solutions. The company has also taken the lead or participated in formulating a series of national and industry standards.
In terms of customer expansion, with 30 years of industry experience, Zhongheng Electric has established stable strategic cooperative relationships with leading clients from various sectors, including China Mobile, China Tower, China Telecom, Alibaba, Tencent, Baidu, PDD Holdings, State Grid, Southern Power Grid, and Hello Travel, among other well-known enterprises.
It is worth mentioning that in mid-August last year, Zhongheng Electric issued an announcement regarding unusual fluctuations in stock trading.
At that time, Zhongheng Electric stated that the company noticed recent online rumors about its OEM production, product sales, and pricing related to overseas cloud giants such as NVIDIA, Meta, and Google. These were all false rumors.
Zhongheng Electric clearly stated that, as of the date of the announcement, the company had not signed any cooperation agreements or sales contracts with the above-mentioned overseas cloud companies. However, it emphasized that the company was actively promoting the expansion of its overseas markets.
From the perspective of business structure, Zhongheng Electric's main businesses cover segments such as communication power systems, data center power supplies, power operation power systems, software development, sales, and services.
In 2024, data center power supplies, power operation power systems, and communication power systems contributed 34.06%, 24.4%, and 15.57% of the company’s revenue, respectively.
By the first half of 2025, the revenue share of the data center power segment further increased to 45.66%, firmly maintaining its position as the largest source of income for the company.
It is worth noting that in areas such as high-voltage direct current (HVDC) power supply for data centers and prefabricated power modules, Zhongheng Electric holds a leading position in the industry and has led the formulation of HVDC national standards.
According to OFweek Lithium Battery Network, Zhongheng Electric is the only domestic enterprise that simultaneously masters both HVDC and Panama power supply technologies. Its market share in the HVDC niche exceeds 30%, ranking first for several consecutive years.
In fact, with the exponential surge in AI computing power demand, energy efficiency has become a core bottleneck constraining technological development.
According to QYResearch forecasts, by 2029, the global HVDC market size will exceed $15.68 billion, with a compound annual growth rate of 6.9%. Tech giants such as Microsoft, Google, and NVIDIA have explicitly identified HVDC as a 'must-have' for data center energy architecture.
CATL's Secretary of the Board, Jiang Li, stated during the Q3 2025 earnings call that the rapid expansion of data center scale will lead to significant demand for energy storage batteries.
Regarding this strategic cooperation, Dong Yunfan, an analyst at Zhuochuang Info and FuBao Lithium Battery, told Interface News that CATL's move is primarily driven by optimism about the development direction of intelligent computing centers. For CATL’s 'zero-carbon grid' business portfolio, this capital increase represents an early strategic move in the computing power sector.
Some analyses suggest that CATL's move aims to exchange capital for time and equity for ecosystem building. As the wave of AI computing power surges, data center electricity demand is growing exponentially. CATL's $4.1 billion investment is a 'defensive investment' to address the shortcomings of its 'computing-power synergy' strategy, helping it secure a favorable position in future market competition.
Revenue growth without profit growth; last year, the actual controller was sentenced to three years in prison, suspended for four.
Although Zhongheng Electric holds a leading position in the HVDC sector, it is facing the challenge of 'revenue growth without profit growth.'
Financial reports show that in Q3 2025, Zhongheng Electric achieved revenue of 527 million yuan, a year-on-year increase of 32.05%; net profit attributable to shareholders for the quarter was 25 million yuan, a year-on-year increase of 39.66%, with both indicators showing growth.
However, when expanding the scope to the first three quarters of 2025, Zhongheng Electric reported revenue of 1.418 billion yuan, a year-on-year increase of 20.29%; but net profit attributable to shareholders was only 73 million yuan, a year-on-year decrease of 15.59%, with profits moving in the opposite direction of revenue growth.
iFinD data from Tonghuashun shows that in the first three quarters of last year, Zhongheng Electric's gross margin fell from 26.35% in the same period of 2024 to 23.51%.
The net cash flow from operating activities of Zhongheng Electric, however, dropped from CNY 1.9 billion in the same period of 2024 to CNY -0.7 billion in the first three quarters of last year.
Zhongheng Electric explained that this was mainly due to the increase in cash payments for purchasing goods and receiving labor services during the current period compared to the same period last year.
In terms of debt, as of the end of the third quarter last year, Zhongheng Electric's total liabilities reached CNY 1.454 billion, an increase of 42.53% compared to the same period last year.
iFinD data from Tonghuashun shows that Zhongheng Electric’s asset-liability ratio has also been continuously growing in recent years, rising from 29.42% at the end of 2023 to 35.07% at the end of 2024, and further climbing to 37.26% by the end of the third quarter last year.
Moreover, according to Zhongheng Electric’s annual audit report for 2024, as of the end of 2024, the company's accounts receivable balance was approximately CNY 1.2 billion, with bad debt provisions amounting to around CNY 165 million, indicating a high book value.
The auditing firm identified the measurement of expected credit loss on accounts receivable as a key audit matter, pointing out that if the accounts receivable cannot be recovered on time or are unrecoverable and bad debts occur, it would significantly impact the financial statements.
As of the end of the third quarter last year, Zhongheng Electric’s accounts receivable accounted for over 900% of the latest annual report’s attributable net profit, still posing a high risk of collection.
In addition to financial concerns, Zhongheng Electric also faced the impact of legal risks involving its actual controller. At the end of last year, Zhu Guoding, founder and actual controller of Zhongheng Electric, received a 'Criminal Judgment' from the Intermediate People's Court of Hangzhou, Zhejiang Province.
The 'Criminal Judgment' revealed that Zhu Guoding was sentenced to three years in prison, suspended for four years, and fined CNY 1 million for the crime of manipulating the securities market.
It is reported that before being embroiled in the market manipulation scandal, Zhu Guoding had long served as the chairman of Zhongheng Electric, playing a crucial role in the company’s strategic decisions and management operations.
In August 2020, Zhu Guoding was investigated by the CSRC on suspicion of stock price manipulation. In October of the following year, Zhu Guoding received a 'Bail Decision' issued by the Hangzhou Public Security Bureau, deciding to grant him bail.
Subsequently, Zhu Guoding applied to resign from his position as chairman due to personal reasons. After Zhu Guoding's resignation, his wife Bao Xiaoru took over as chairwoman.
Radar Finance will continue to monitor the follow-up progress of this cooperation. $CATL (03750.HK)$
Produced by Radar Finance. Written by Peng Cheng, edited by Meng Shuai.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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