With extremely low R&D investment and a management team composed entirely of sales professionals, Daqin Digital Energy, which bears distinct BYD imprints, has a very fragile valuation of 5.8 billion yuan.

Daqin Digital Energy started its business with compatibility, now facing squeeze from industry giants and profitability tests.

According to Foresee Energy, Daqin Digital Energy has reached a valuation of 5.835 billion yuan after several rounds of financing. As early as June 26 this year, Daqin Digital Energy has submitted its listing application to the Hong Kong Stock Exchange.

According to Frost & Sullivan's data, Daqin Digital Energy's residential energy storage shipments reached about 2.5GWh in 2025, with a market share of 6.5%, ranking fifth globally. From a Series A valuation of 380 million yuan in 2022 to the current 5.8 billion yuan, its valuation has increased 15 times in more than three years.

As a system integrator founded only in 2017 that has no cell production capacity and does not produce inverters, what does it rely on to achieve such results?

Seizing two critical windows: one related to timing, the other related to people

The rise of Daqin Digital Energy is essentially a precise arbitrage of market opportunities.

When the company was founded in 2017, the European residential energy storage market was just in its infancy. Inverter giants such as Huawei and Sungrow had not yet taken energy storage batteries as their strategic priority, and there was a lack of standardized battery products on the market that could be compatible with multi-brand inverters.

Daqin Digital Energy seized this gap, and its built-in BMS communication protocol is compatible with more than 90% of mainstream inverter brands. Installers do not need to match different batteries for different inverters, and one set of solutions can be applied to all scenarios.

However, products alone are not enough, there must be a team that can sell them well. The core team of Daqin Digital Energy is almost all from BYD. Liu Yang, the chairman, has worked in BYD for 18 years, and served as sales director of the photovoltaic business division before leaving. Executive director Tong Jiancheng, deputy general manager Lei Chunbo, financial director Zhao Ranzhi, and several other management members are almost all from BYD, and they are all in charge of the sales sector. Liu Yang directly and indirectly controls a total of about 59.04% of the company's voting rights. That is to say, what this sales team is best at is not developing battery cells, but selling products.

Daqin Digital Energy set its battlefield overseas from the very beginning. In 2025, 95.1% of the company's revenue came from regions outside Chinese mainland, and the single European market contributed 61%. The channels almost entirely rely on distributors, and the proportion of distributor sales has climbed to 98.2% in 2025.

Foresee Energy previously commented that this asset-light operation model allowed it to achieve the fastest growth with the minimum investment. The European energy crisis in 2021 fully boosted the demand for residential energy storage. Daqin Digital Energy seized this window period, and two years later became the second largest residential energy storage brand in the European market, second only to Tesla.

However, the rapid growth cannot hide its inherent fragility.

The income statement looks good, but where did the money go

In 2025, Daqin Digital Energy recorded a revenue of 2.525 billion yuan, a year-on-year increase of 244.3%, and its net profit turned from a loss of 378 million yuan to a profit of 125 million yuan. The figures are indeed impressive.

However, the turnaround from loss to profit needs to be analyzed in detail. When the price of lithium carbonate hit a historical high of 500,000 yuan per ton in 2022, Daqin Digital Energy purchased a large number of cells and produced 284,000 residential energy storage batteries. Afterwards, the price of lithium carbonate plummeted by 80%, and the European market changed rapidly from a supply shortage to oversupply.

This batch of batteries purchased at the peak price became a heavy burden, 114,000 units were sold at a discount in 2023 with an impairment provision of 47 million yuan, and another 108,000 units were sold at a discount in 2024, resulting in a gross loss of 130 million yuan and another impairment provision of 81.4 million yuan. The total loss related to old inventories is about 292 million yuan.

In the 2025 profit, there is 10.037 million yuan of impairment reversed after the clearance of old inventories, and about 59.3 million yuan of exchange gains brought by the appreciation of the euro. Excluding the exchange gains, the actual profit in 2025 is about 66 million yuan, with a net profit margin of less than 3%.

What is more worrying is its balance sheet. Daqin Digital Energy's asset-liability ratio is as high as 103.66%, and its total liabilities exceed total assets. From 2023 to 2025, the company's net asset value changed from a positive 52.63 million yuan to a negative 138 million yuan. As of April 30, 2026, the net asset value is still negative 29.09 million yuan.

Moreover, Daqin Digital Energy's cash flow is also not optimistic. The net cash flow from operating activities continued to have large net outflows in 2023 and 2024, and barely turned positive to 81.3 million yuan in 2025. By the end of 2025, the company recorded a net current liability of 495 million yuan.

Before submitting the listing application, some institutional investors of the C-round chose to exit. The primary market investors voted with their feet, sending an unfriendly signal.

The "compatibility" advantage is being taken back by inverter manufacturers

For the industry, it is worth noting that the "compatibility with multi-brand inverters" on which Daqin Digital Energy built its business may be turning into an increasingly narrow niche.

Traditional inverter companies naturally control the system entry. In the household photovoltaic and energy storage system, the inverter connects the photovoltaic panels, batteries, power grid, loads and cloud platform, which is not only an energy conversion device, but also the control center. When inverter enterprises generally start to produce energy storage batteries, they aim to take back this profit pool.

The data speaks for itself. Deye Technology recorded a revenue of 3.832 billion yuan from energy storage battery packs in 2025, with a gross profit margin of 31.81%. Growatt achieved 1.546 billion yuan in revenue from energy storage batteries, a year-on-year increase of 227%, with a gross profit margin of 26.26%. Solis Technology entered the energy storage system track in the second half of 2025, contributing about 148 million yuan in revenue in that period.

What these companies are competing with Daqin for is not only battery orders, but also the voice of installers, system standards, warranty responsibilities and cloud data.

For installers, the original factory complete set means deeply adapted protocols, full channel rebates, and a single responsible entity. Daqin Digital Energy's so-called "non-binding to a single brand", from another perspective, means that no brand entry can support it, the ecological rules are formulated by inverter manufacturers, and once they take back this niche, Daqin will lose its foothold.

Compared with peers, where is Daqin's gap

Daqin Digital Energy recorded a revenue of 2.525 billion yuan in 2025, ranking fifth in global residential energy storage shipments. However, the companies ranked ahead are not in the same order of magnitude at all.

Deye Technology achieved total revenue of 12.224 billion yuan in 2025, of which the revenue from energy storage battery packs alone reached 3.832 billion yuan. Growatt recorded 3.607 billion yuan in overseas revenue in 2025. Pylon Technologies achieved revenue of 3.164 billion yuan in 2025, with energy storage shipments of 3.2GWh. Daqin Digital Energy's revenue scale of 2.5 billion yuan still lags far behind the leading enterprises.

The more critical gap lies in technology investment. The R&D expense ratio of Daqin Digital Energy is significantly lower than that of its peers. Akuvox Energy has an R&D expense ratio as high as 14.89%, and Seris New Energy has accumulated 970 million yuan in R&D investment in three years, which is about 4 times that of Daqin Digital Energy.

As a system integrator with no self-produced cells and no self-produced inverters, if even the R&D investment cannot keep up, what can it rely on to hold the only barrier of "compatibility"?

Daqin Digital Energy's prospectus states that the fundraising purpose includes "potential strategic investment or acquisition to strengthen the technological leadership and market position in core businesses". Taking equity participation in cell manufacturers may be a more realistic choice, which will not damage the relationship with inverter partners, and can maintain the image of "neutral and compatible" to the outside world. If it can acquire cost-effective cell production capacity during the industry reshuffle period, that is also a viable path.

However, this path has a time window. We need to ask: when price-sensitive markets such as the Middle East, Africa and Asia-Pacific are also targeted by integrated giants, how long can Daqin Digital Energy maintain its "compatibility" advantage?

A company that started with sales, lives on distribution, has neither upstream core technology nor downstream user entry, no longer only needs to answer the question of "how to make money", but also the question of "what supports it to survive".