Zhongke Electric, kicking open the door to energy storage!

(Source: Lao Zhang Investment Research)

The same lithium battery, two worlds!

Over the past year, “phosphate-based” materials have become the price hike pioneers. As of December 2025, the price of lithium iron phosphate (LFP) has increased by over 30% compared to September 2025, while the price of lithium hexafluorophosphate (LiPF6) has surged even more, with nearly 200% growth in just two months.

In contrast, anode materials haven’t been as fortunate, with overall industry prices remaining very stable.

As of February 2026, the mainstream prices for mid-range artificial graphite anode materials are between 23,000 and 32,000 yuan/ton, and high-end products are between 42,000 and 65,000 yuan/ton. The price increase is far less than that of lithium iron phosphate and lithium hexafluorophosphate.

Logically, with minimal price increases, it’s difficult for performance to grow significantly. But looking at the earnings forecasts, many anode companies are quietly making money, with Putailai, Zhongke Electric, and Shanshan Corporation standing out.

In 2025, Putailai’s net profit increased by 98.14% year-on-year, Zhongke Electric’s net profit is expected to increase by up to 70% year-on-year, and Shanshan even turned losses into profits.

So, if prices aren’t rising, where does the profit come from?

There are only two main reasons affecting profit: one is price, the other is cost. Since prices haven’t increased much, explosive profit growth must come from expanding sales volume and reducing costs.

On the sales side, it’s straightforward—simply put, selling more to compensate for lower prices.

In 2025, China’s anode material shipments reached 2.922 million tons, up 38.1% year-on-year. Among them, artificial graphite shipments totaled 2.54 million tons, thanks to its stable electrochemical performance and mature process, dominating the market.

Industry data shows that in 2025, the average capacity utilization rate of China’s anode materials was about 66%, an increase of roughly 5 percentage points from the previous year.

In 2025, Putailai’s anode material shipments reached 143,000 tons, up 8.09% year-on-year. Based on financial disclosures, let’s look at the shipment figures for Shanshan and Zhongke Electric in the first half of the year.

In the first half, Shanshan’s artificial graphite anode shipments ranked first domestically, accounting for 21% of the total industry shipments. Zhongke Electric’s capacity utilization rate was as high as 106.72%, far exceeding the industry average of about 66%.

Why did capacity utilization increase significantly in 2025?

The answer is the rising demand for energy storage and fast-charging vehicles.

The global energy storage market in 2025 can be described as a full-scale explosion.

Domestically, in 2025, China’s newly installed energy storage capacity reached 136 million kW, an 84% increase over 2024, and more than 40 times the level in 2020—an exponential growth.

Overseas, in 2025, Australia’s energy storage market grew by 55% year-on-year, and Saudi Arabia successfully commissioned four independent energy storage projects, maintaining strong performance.

As a core material accounting for 12% of lithium battery costs, anode materials naturally benefit the most from this green energy revolution.

The surge in energy storage is driven by the global pursuit of energy upgrades, while the rising demand for fast-charging vehicles stems from range anxiety.

Take CATL as an example. In 2025, it launched new products such as the second-generation Shenxing ultra-fast charging batteries, Shenxing Pro batteries, Xiaoyao dual-core batteries, and sodium-ion batteries, rapidly increasing the penetration of fast-charging technology.

Fast-charging batteries require higher倍率性能 (rate performance) from anode materials, which increases the proportion of high-performance anodes from 5%-10% to 10%-15%, leading to a product upgrade toward higher added value.

Currently, Putailai, Zhongke Electric, and Shanshan are all partners of CATL. Their technological iterations are translating into increased orders.

However, demand-side growth only solves the issue of whether there are orders. The real conversion of profits from paper to real money depends on the improvement in capacity utilization and the resulting cost reduction.

Anode materials are heavy assets and high-energy-consuming industries. In the first three quarters of 2025, Shanshan’s fixed assets and construction in progress accounted for 40.37% of total assets, Putailai 35.89%, and Zhongke Electric 29%, all relatively high.

Among these, graphitization accounts for 50% of anode material costs, making it the largest cost component. Simply put, it involves heat-treating petroleum coke, needle coke, etc., at high temperatures of 2300–3000°C to form regular graphite crystals.

To cut costs, companies can build their own production lines, converting graphitization into self-supply, directly eliminating the most expensive outsourced processing costs.

By 2025, Putailai had built an annual capacity of 250,000 tons of anode materials. The Sichuan Zichen anode production base was 53% complete, with the second phase of the 100,000-ton project expected to come online gradually in 2026.

Currently, Shanshan’s integrated project for 300,000 tons per year has also been completed and put into operation. The second phase of the Inner Mongolia Baotou anode project is nearly finished, gradually entering capacity release.

The release of integrated capacity has indeed allowed companies to enjoy cost reductions.

In 2025, Putailai’s gross profit margin rose to 31.72%, up 4.23 percentage points year-on-year. In the first three quarters, Shanshan’s gross margin reached 16.63%, also slightly higher.

Strangely, Zhongke Electric is the only exception.

In the first three quarters of 2025, the company’s gross margin was 18.48%, but in the third quarter, it dropped to 14.02%, lower than Putailai and Shanshan.

Even more strangely, despite a 52.03% increase in revenue and an 118.85% jump in net profit in the first three quarters, its net cash flow from operating activities plummeted by 490.78%, falling to -1.096 billion yuan.

So, where did Zhongke Electric’s money go?

The first thought is that money turned into accounts receivable. In the first three quarters of 2025, the company’s accounts receivable surged to 3.376 billion yuan, a 41.51% increase, even surpassing the scale of Shanshan, which has larger revenue.

The root cause lies in customer and product structure. In 2024, Zhongke Electric’s top five customers accounted for 84.49% of revenue, while Putailai and Shanshan were below 70%. Customer concentration weakens bargaining power.

Product-wise, about 90% of Zhongke Electric’s revenue comes from graphite anode materials, whereas Putailai and Shanshan have diversified products, including separators, coating materials, and polarizers, reducing customer concentration.

Does this mean Zhongke Electric has problems?

The divergence between cash flow and profit is common in growing companies. Inventory buildup, R&D, expansion—all are influencing factors. Moreover, despite the significant performance growth in 2025 and a market share of over 60% in electromagnetic metallurgical equipment, the underlying growth trend remains intact.

Looking ahead, Zhongke Electric is also extending into core solid-state battery materials—silicon-based anodes and lithium metal anodes.

Silicon anodes are currently a rapidly penetrating solid-state battery material, with a theoretical capacity of 4200mAh/g, 10 times that of graphite (372mAh/g).

Lithium metal anodes combined with lithium manganese oxide cathodes can boost energy density to 440Wh/kg. In lithium-sulfur and lithium-oxygen systems, it can even reach 650Wh/kg to 950Wh/kg, making it one of the most promising anode materials.

Currently, the company has achieved mass production of hard carbon anodes for sodium-ion batteries. Silicon-carbon anodes for solid-state batteries are entering mass production, while lithium metal anodes are still under development.

In summary, three companies, three paths: Putailai is a platform combining equipment and materials; Shanshan is driven by dual core businesses; Zhongke Electric is focusing on a single breakthrough.

The differentiation among these companies reveals a fact: cost reduction through integration is normal, but high-end product development, diversified customer structure, and solid-state battery technology positioning are the real profit determinants.