On August 26, Sunwoda Electronic Co., Ltd. (SZ: 300207) released its first-half earnings report. During the January-to-June period, the company generated RMB 38.179 billion in revenue, a year-on-year increase of 41.48%. However, net profit attributable to shareholders came in at RMB 603 million, a 29.59% decline, while non-GAAP net profit attributable to shareholders plunged 83.32% to RMB 97.2614 million.

Founded in 1997 and listed on the ChiNext board in 2011 as the first A-share lithium battery stock, Sunwoda has seen revenue grow without corresponding profit gains over the past two years. Nowhere is this contradiction more visible than in its energy storage division, which posted strikingly mixed results in the first half. The storage systems business generated RMB 1.77 billion in revenue, up 76.21% year on year, with shipments reaching 14.7 GWh, a 64.98% increase. Yet gross margin for this segment stood at just 18.18%, down 2.08 percentage points year on year.

Sunwoda said its storage segment enjoyed full order books and high capacity utilisation during the period, describing the business as being in an accelerated phase of scaling up. Even so, storage systems revenue represented merely 4.64% of total company sales — a figure that falls far short of both its own strategic ambitions and the performance of its peers.

Why Storage Remains a Contradiction

Consumer batteries and EV batteries currently serve as Sunwoda's core revenue drivers, but both are under pressure. Consumer batteries, which feed smartphones and PCs, face visibly shrinking end-markets with limited growth headroom, while the EV battery division has racked up cumulative losses of approximately RMB 5.759 billion from 2021 through 2025, with RMB 3.169 billion lost in 2025 alone.

Against this backdrop, storage has been positioned as the company's growth saviour. Sunwoda's storage involvement actually dates back to 2012, when it developed small off-grid home storage products. A dedicated storage division followed in 2015, and in 2016 the company established subsidiary Shenzhen Sunwoda Energy Technology Co., Ltd. Today, its storage business spans power storage, commercial and industrial storage, residential storage, network energy, and smart energy, supported by full in-house capabilities stretching from cells and battery packs through BMS, EMS, and system integration.

Despite growing strategic emphasis on storage in recent years, the division's performance tells a fragmented story. On one hand, growth has been rapid: storage systems revenue hit RMB 1.11 billion in 2023 (up 144%), RMB 1.889 billion in 2024 (up 70%), RMB 2.313 billion in 2025, and RMB 1.77 billion in the first half of 2026 (up 76%). Installed capacity tells an even more dramatic tale, with 8.88 GWh in 2024 surging to 25.6 GWh in 2025 — nearly tripling in a single year.

On the other hand, shipment growth has consistently outstripped revenue growth. In 2024, storage shipments grew 107% while revenue rose just 70%. In the first half of 2025, shipments jumped 133% against 69% revenue growth. For full-year 2025, shipments skyrocketed 188% while revenue managed only 22% growth. This pattern of rising volume without matching revenue — a classic case of more output, less income — lies at the heart of the company's storage dilemma.

Compounding the volume-revenue mismatch, the division also struggles to convert revenue into profit. Gross margin for storage systems was 19.04% in 2023, improved to 20.39% in 2024, eased to 20.26% in the first half of 2025, recovered to 23.34% for full-year 2025, but then fell back sharply to 18.18% in the first half of 2026 — down 2 percentage points year on year and more than 5 points below the 2025 full-year average.

Revenue concentration remains another weak spot. Storage accounted for just 3% of total revenue in early 2023, and by the first half of this year had only climbed to 4.64% — a gain of less than two percentage points over three and a half years. Meanwhile, many peers have ridden the storage boom to far greater heights. Contemporary Amperex Technology Co., Ltd. (CATL) (SZ: 300750) now derives nearly 20% of revenue from storage, EVE Energy Co., Ltd. (SZ: 300014) exceeds 30% from storage batteries, and Guangzhou Great Power Energy & Technology Co., Ltd. (SZ: 300438) generates more than 75% of its revenue from storage. Against these benchmarks, Sunwoda's storage business remains both small in scale and slow in progress.

Paths to a Breakthrough

Signs suggest Sunwoda is already tackling its storage challenges on two fronts: expanding demand and tightening cost control.

One approach involves broadening storage applications. Emerging use cases — in low-altitude aviation, AI data centres (AIDC), EV charging infrastructure, and mining — offer substantial headroom. In its latest interim report, Sunwoda noted that orders for AIDC backup-power storage reached record highs on the back of surging global demand. The company has also been an early mover in low-altitude applications: last year it began mass production of its first-generation aviation power cell, the "Xin Yunxiao 1.0," which features semi-solid electrolyte technology with energy density exceeding 320 Wh/kg and has completed 100-kilometre flight verification aboard a 100-kilogram-class aircraft. It has set a further target of surpassing 500 Wh/kg with all-solid-state cells by 2027.

Beyond manufacturing, Sunwoda is extending further downstream. In September 2025, it joined forces with Yuanzhi Storage and Towngas Energy to establish a fund focused on commercial and industrial storage. In June of this year, it partnered with Kai Xuan Capital and Xuneng Technology on a new fund committing at least 70% of capital to independent storage projects. And in August, it co-launched a private equity fund with Yuanzhi Storage and the Shenzhen New Energy Storage Industry Equity Fund, targeting electrochemical-based storage plants, integrated solar-plus-storage-charging stations, energy management systems, and upstream segments of the storage value chain.

On the gross margin front, Sunwoda is also taking countermeasures. Storage product margins are closely tied to lithium carbonate prices. At its April earnings call, management disclosed that the company holds exploration rights at the East Taijinar Salt Lake in Qinghai Province and has secured lithium carbonate supply through long-term contracts, joint ventures, recycling, and futures hedging. It has also established price-linking mechanisms with downstream customers to share raw-material price risk.

Still, management has acknowledged that supply-chain cost optimisation will take time to show results. First-half performance suggests the strategy has yet to deliver measurable benefits. But if cost control can eventually be achieved and combined with expanding storage applications, Sunwoda's storage division may yet unlock new room for growth.