CATL invests 4.1 billion yuan in Zhongheng Technology. CATL's calculations go beyond just batteries.
CATL spent 4.1 billion yuan to acquire a 49% stake in Zhongheng Technology Investment. Based on the transaction consideration, CATL indirectly holds 17.4% of the shares of Zhongheng Electric, a company listed on the A-share market. The market's focus has turned to HVDC - the revenue of Zhongheng Electric's HVDC business more than doubled last year, reaching 668 million yuan, making it the company's core asset on the surface. However, Zhongheng Electric's net profit for the whole year of 2024 just exceeded 100 million yuan. The 4.1 - billion - yuan investment corresponds to a valuation of over 8.3 billion yuan, with a premium of more than 40%.
If the investment were only for an HVDC business with annual revenues in the hundreds of millions and already holding the top market share, this price would be unjustifiable. The premium paid by CATL points to another thing: the solid - state transformer (SST). It has not yet entered mass production and is still in small - scale pilot testing, but NVIDIA has already included it in the white paper on the next - generation power supply architecture for data centers. With this deal, CATL is not only betting on the certainty of HVDC but also buying a ticket to SST. Only when these two "cards" are combined can we understand the full value of the 4.1 - billion - yuan investment.
CATL's Restraint Hidden in the Transaction Structure
The deal itself is worth a detailed look. Instead of directly investing in the listed company Zhongheng Electric, CATL increased its capital in Zhongheng Technology Investment, the parent company of Zhongheng Electric. After the capital increase, CATL holds 49% of the shares without forming a concerted action relationship, and Zhu Guoding remains the actual controller. CATL has recommended one director and one deputy general manager, without changing the control rights.
In addition, of the 4.1 billion yuan, the 99.697% equity of Times Tianyuan is valued at 1.196 billion yuan, and the remaining 2.904 billion yuan is in cash. Times Tianyuan is a company within the CATL system that specializes in energy - storage converters. It was established in 2018, starting with lithium - battery equipment and later entering the PCS field. By integrating it into Zhongheng Technology Investment, CATL is directly inserting the PCS component into Zhongheng's supply chain. Since the HVDC system uses PCS, Zhongheng can use its own in the future, which can reduce costs and control the supply chain.
However, CATL did not touch the listed company's financing channels. Zhongheng Technology Investment only holds 35.59% of the shares of Zhongheng Electric. After conversion, CATL's 49% stake in Zhongheng Technology Investment corresponds to only 17.4% of the equity in the listed company. This structure means that in the future, if Zhongheng Electric conducts additional share issuances, rights issues, or bond issuances, CATL has to follow the same proportion as other shareholders and cannot make decisions independently.
If Zhongheng Electric needs to expand production on a large scale in the future - for example, if overseas orders for HVDC surge or SST enters the mass - production stage - the refinancing pressure at the listed - company level will be significant. By holding shares through the parent company, CATL does not need to assume the obligation of consolidation and is not responsible for the listed company's debts and cash flow. The essence of this deal is a strategic alliance, not an acquisition. CATL has gained sufficient influence at the lowest cost, and Zhongheng Electric has obtained CATL's brand endorsement and supply - chain resources. Both sides benefit without being overly restricted.
HVDC is on the Verge of Explosion, but the Story Doesn't End There
Zhongheng Electric's HVDC business is accelerating. In 2024, the revenue from data - center power supplies reached 668 million yuan, with a year - on - year growth rate of 111%. Its share in the total revenue increased from 20% to over 30%. The company stated that the delivery volume of its 10kV direct - to - 240V DC power - supply system is increasing, meeting the needs of multiple large - scale intelligent computing centers.
Traditional UPS has a long link and high losses. HVDC eliminates one level of conversion, increasing the efficiency to 97.5% and saving over 30% in energy. In 2019, Alibaba, together with Zhongheng Electric and Delta, developed the Panama power supply, which integrates transformers, switchgear, and HVDC. It is currently the most efficient solution in large - scale applications.
However, Zhongheng has already achieved the top market share in China and is among the top three globally, leaving little room for further share growth. There is potential for growth in the overseas market - the gross profit margin of overseas HVDC can reach 40%, more than ten percentage points higher than that in the domestic market - and Zhongheng is also promoting the implementation of its business in the Southeast Asian market. However, overseas expansion is a slow - moving variable, providing limited support for short - term valuation.
What really justifies the 4.1 - billion - yuan premium is Zhongheng Electric's position in the field of solid - state transformers. In the 800V DC white paper released by NVIDIA in October 2025, SST was defined as the ultimate form of out - of - cabinet power supplies. The principle is to directly convert 10kV medium - voltage AC to 200 - 1000V DC, using SiC and GaN for high - frequency conversion in the middle, with an efficiency of up to 98.3%.
Zhongheng Electric has advanced SST to the small - scale pilot stage, which is relatively fast in China. According to brokerage calculations, the value of SST in a single data center can exceed one million yuan, and the potential scale of demonstration projects in some parks can reach billions. However, note two words: "calculation" and "potential". Currently, SST does not generate significant revenue in Zhongheng Electric's financial statements. The year 2026 is regarded as a crucial window for its commercial implementation.
The market's reaction to SST is much more enthusiastic than the company's own. As soon as NVIDIA's white paper was released in October 2025, the stocks of data - center power - supply concept companies soared, and Zhongheng Electric had consecutive daily limit up. The company quickly issued a clarification announcement, suppressing the market expectations with a single sentence: It has not signed any cooperation agreements or sales contracts with NVIDIA or Google. Such restraint is rare but easy to understand. The core components of SST are silicon carbide and gallium nitride power semiconductors, which have a much higher technical threshold than traditional HVDC. There are still three hurdles between the pilot stage and mass production: yield rate, cost, and customer certification.
CATL Wants to Join the Game of Computing - Power Synergy
Taking a broader view, the significance of this deal becomes clearer. In 2026, for the first time, the government work report included computing - power synergy in the new infrastructure project, and the National Data Administration requires that the proportion of green power in newly built computing facilities at hub nodes exceed 80%. The power demand of data centers is no longer just about electricity consumption but also involves green - power consumption, energy - storage support, and peak - valley regulation.
CATL has strong cards in this game. In 2025, it sold 121 GWh of energy - storage batteries, holding a 30.4% global market share and ranking first for five consecutive years. The Jining base in Shandong Province is expected to add over 100 GWh of energy - storage production capacity in 2026. In a research report released after the deal, Morgan Stanley stated directly: CATL is transforming from an indirect energy - storage battery supplier to a direct data - center power - supply solution provider for customers.
Zhongheng Electric fills the missing piece in CATL's puzzle. CATL has batteries and PCS, while Zhongheng has HVDC systems and data - center customer resources. Together, they can complete the chain from energy - storage batteries to DC power distribution.
Tracing back along this line, in 2020, CATL signed a cooperation framework with the listed company, asking Zhongheng Electric to develop and supply intelligent battery - swapping cabinets. Later, Puquan Capital, an industrial investment fund under CATL, participated in the implementation of the Lingang AIDC computing - power synergy platform of SenseTime. The prediction accuracy of this platform reaches 88%, the PUE is reduced to 1.267, and it saves over 10 million kWh of electricity per year.
From battery - swapping cabinets to computing - power synergy platforms and then to investing in the parent company of Zhongheng Electric, CATL's direction has remained unchanged. It no longer aims for just the profit from selling batteries but for the ability to deliver a complete power - supply system. Zhongheng Electric's HVDC is the current delivery vehicle, and SST is the future upgrade option.
Returning to the 4.1 - billion - yuan valuation, the market's valuation of HVDC is transparent. With Zhongheng Electric's 668 - million - yuan revenue, top market share in the industry, and a customer list including Alibaba, Tencent, Baidu, and 21Vianet, it's possible to roughly calculate the value of this part. The excess premium lies in SST.
Whether this "card" can turn out well depends on two points. One is the technological maturity. NVIDIA itself predicts that the 800V HVDC solution will not be scaled up until 2027, and the timeline for SST will be even later. The other is customer acceptance. Switching the power - supply architecture of a data center is not as simple as replacing a single component; it involves design specifications, operation and maintenance systems, and personnel training. Customers' decision - making cycles are long.
Zhongheng Electric is in a good position. HVDC is already in large - scale production, the Panama power supply is the current optimal solution, and there are pilot projects for SST. It is involved in all three technological routes. No matter which direction the next - generation power - supply architecture takes, it has the foundation to respond.
What CATL bought with 4.1 billion yuan is ultimately this foundation of "having a position in all three routes". HVDC provides a guarantee, SST is a bet, and the Panama power supply serves as a transition. One explicit, one implicit, and one transitional "card" are on the table, waiting for the game of computing - power synergy to begin.
This article is from the WeChat official account "Foreseeing Energy", written by Zhao Jianan and published by 36Kr with authorization.