Hithink's profit has doubled, yet its cash flow is under strain, with 6 billion yuan of inventory piling up in the warehouses. What kind of bet is this first public-listed leading energy storage enterprise making?

HyperStrong recorded a sharp profit surge but worsening cash flow, hoarding battery cells to bet on lithium price hikes, and facing massive capital advance pressure in its overseas operations.

A company reports an attributable net profit of 632 million yuan, yet its net operating cash flow posts an outflow of 1.211 billion yuan, with profits failing to be converted into actual cash. This sounds unbelievable, but it has started to become a common phenomenon in the energy storage sector.

Vision Energy notes that at the end of August, HyperStrong released its 2026 semi-annual report, posting revenue of 6.297 billion yuan, up 39.23% year on year; attributable net profit reached 632 million yuan, rising 100.16% year on year. The net profit margin jumped to 10.04% from 6.98% in the same period last year, and the attributable net profit margin in Q2 alone hit 10.9%, the performance report is so impressive that people want to applaud for it.

However, on another page of the same financial report, it writes: operating cash flow stood at -1.211 billion yuan, and inventory skyrocketed to 6.001 billion yuan from 2.175 billion yuan at the start of the year, accounting for 28.82% of total assets.

This company with a market value of around 30 billion yuan has put more than half of its net assets into the battery cells stored in warehouses. If the bet wins, its gross profit margin will stay stable in the second half of the year; if it loses, the price of lithium carbonate will keep falling, and inventory impairment will wipe out all its profits at once. HyperStrong is not just manufacturing energy storage systems, it is placing a targeted bet on lithium prices.

One side faces rising prices, the other side faces price slashing

First look at what exactly is piled on HyperStrong's shelves. Out of the 6 billion yuan inventory, raw materials rose from 467 million yuan to 1.863 billion yuan, finished goods from 1.113 billion yuan to 3.017 billion yuan, and shipped goods from 376 million yuan to 820 million yuan. Raw materials, semi-finished products, and delivered goods are all expanding in scale.

The logic is not hard to understand. In mid-2025, when lithium carbonate was priced at 60,000 yuan per ton, few paid much attention to it, until the price broke through 200,000 yuan per ton in May 2026, with a cumulative increase of over 200%. For lithium carbonate alone, every 10,000 yuan per ton increase in price will add 0.6 to 0.7 cent/Wh to the battery cell cost. Under such circumstances, HyperStrong pre-invested funds to lock in production capacity and hoard battery cells, to ensure sufficient supply in the second half of the year and keep costs under control.

But on the other side, as early as June 2026, the main lithium carbonate futures contract fell back to around 160,000 yuan per ton; on September 11, it plummeted by nearly 10%, falling below 130,000 yuan per ton, down more than 35% from the May high. If this trend continues, the battery cells in HyperStrong's 6 billion yuan inventory that were locked at 200,000 yuan per ton will instantly turn from "strategic reserves" to "high-priced inventory".

Downstream, the unit price of energy storage systems has fallen all the way from 1.5 yuan/Wh in early 2023 to 0.53 yuan/Wh in April 2026, dropping by about 65% in three years. The project IRR calculated by project owners based on the 1.5 yuan/Wh price three years ago can hardly cover costs now as the battery cell cost has doubled, meaning whoever takes the project will suffer losses. In the institutional research minutes on March 16, 2026, HyperStrong's management admitted that since the fourth quarter of 2025, there have been cases of project cancellation, postponement or re-tendering in the market.

However, some signs of loosening have emerged in the industry. On September 11, Sungrow issued a price adjustment letter to its customers, raising the prices of energy storage systems and other products by 5%-15% starting from September 20. More than ten enterprises including EVE Energy, Sinexcel and Inovance are also following up closely.

The collective price hike by leading enterprises is a positive signal, but whether the price increase can be accepted by central and state-owned enterprise tenderees is the key to determining whether players like HyperStrong can get rid of the "loss-making for market share" dilemma.

Refuse to take orders from central SOEs, and cannot afford the capital advance for overseas business

HyperStrong's position in the centralized procurement of domestic central and state-owned enterprises can be summed up in four words: voluntarily exit.

In the 12GWh energy storage system centralized procurement of China Huadian, the company offered a price of 0.5414 yuan/Wh, ranking 9th among 10 shortlisted enterprises; in the 4.5GWh centralized procurement of State Power Investment Corporation, its offer was 0.5608 yuan/Wh, the highest price among the 5 winning candidates. Some investors asked on the interactive platform that the market previously expected HyperStrong to capture more than 15% share in the 2026 central SOE centralized procurement, but the current expectation has been revised down to less than 5%. The company did not confirm this statement directly, only responding that it "adheres to the market and product value-oriented pricing principle". To put it bluntly, it will not follow the low price trend, and prefers to keep its price at a relatively high level. Under the rule that central SOE tenders only focus on the unit price per Wh, this choice means voluntarily giving up market share.

With domestic profit-making getting harder, HyperStrong turns its attention to overseas markets. In the first half of the year, its overseas revenue reached 585 million yuan, up 96% year on year, and the overseas gross profit margin was 28.28%, higher than the 20.77% in the domestic market. Its on-hand overseas orders exceed 23.6GWh, including 440MWh in Malaysia, over 1GWh in the Balkans, about 2GWh in the United States, and 4.6GWh in Italy. Its overseas shipment target has been raised from 2GWh in 2025 to 10GWh in 2026.

But the overseas business is like a rope that is being pulled tighter and tighter. The performance bond and advance payment deposit for overseas projects generally account for 10%-15% of the contract amount, with a credit period of 90 to 180 days. The higher the overseas revenue, the larger the upfront capital advance, which is a business model of "the more you sell, the tighter your cash flow becomes".

Trade barriers in Europe and the United States are still escalating. The 301 tariff on Chinese energy storage batteries in the US has been raised from 7.5% to 25%, and the comprehensive tax rate once climbed to 48.4% (the peak in early 2026, and later changed after the Supreme Court ruled that the IEEPA tariff was cancelled); the EU's Net Zero Industry Act requires that the proportion of parts from a single non-EU country in public procurement energy storage projects shall not exceed 65%. HyperStrong has planned capacity layout in Southeast Asia to meet compliance requirements, but capacity implementation takes time and capital, both of which are currently in short supply for the company.

The business of advancing capital for both sides essentially means working for upstream and downstream players

Putting HyperStrong's dilemma into the context of the energy storage integration industry, you will find that its situation is not unique.

For the upstream, battery cell procurement accounts for more than 60% of the system cost. Leading battery cell manufacturers have strong bargaining power, and the credit period has been compressed from 30-60 days to 0-15 days, with some requiring full advance payment. For the downstream, its customers are power generation groups and grid platforms, who pay in stages: 5%-10% upon contract signing, 30%-40% after goods arrival, 20%-30% after commissioning, 15%-20% after grid-connected acceptance, and the last 5%-10% as quality guarantee deposit. In ideal conditions, it takes one to two years to get all the payment back.

A report from The Economic Observer in August recorded a typical case: Manager Li, head of an energy storage integrator based in Changzhou, Jiangsu, won the bid for a 100MWh-level independent energy storage project at the end of April, signed the contract and paid the performance deposit in June, with the system offer lower than 0.5 yuan/Wh. By July, both the long-term agreement price and spot price of battery cells rose, and battery cell manufacturers simultaneously increased the proportion of advance payment and shortened the credit period. The previous path of "winning projects at low prices first and then buying battery cells at lower prices later" no longer works, as the contract price is locked while the battery cell price has risen. The profit margin of Manager Li's company has been squeezed to almost zero.

HyperStrong's balance sheet is also confirming the risks of this model. As of the end of the 2026 semi-annual report, the company's short-term loans have increased from 730 million yuan at the beginning of the year to 1.914 billion yuan, a 162% increase, mainly due to new short-term working capital loans from banks. At the end of the first quarter, its total assets stood at 17.272 billion yuan, total liabilities at 12.267 billion yuan, with an asset-liability ratio of 71.02%, of which interest-bearing loans were about 670 million yuan, accounting for less than 6%, and the remaining about 11.6 billion yuan were interest-free liabilities — accounts payable of 6.532 billion yuan (at the end of the semi-annual report), and contract liabilities and other payables of several billion yuan. In other words, more than 90% of HyperStrong's liabilities are accumulated by occupying payment from upstream suppliers and collecting advance funds from downstream customers. But the semi-annual report shows that the rapid rise of short-term loans is changing this structure, and the proportion of interest-bearing liabilities has increased significantly.

This model operates smoothly during the industry upward cycle, but once the payment collection period is extended or suppliers tighten the credit period, these seemingly interest-free liabilities will quickly turn into real capital pressure. In 2023, the net operating cash flow was only 110 million yuan, rebounded to 890 million yuan in 2024, shrank to 532 million yuan in 2025, and directly turned to -1.211 billion yuan in the first half of 2026. The cash flow fluctuates drastically, which is seriously deviated from the profit growth trend.

HyperStrong's 2026 shipment target is 70GWh, up 169% from 26GWh in 2025. According to the calculation of Yangtze Power & New Energy research report, its shipment in the first half of the year is about 12GWh. Soochow Securities expects its production scheduling in Q3 to reach 20GWh, up 30% month on month, but the sustainability depends on battery cell supply and cash flow support. According to securities firms' calculation, its overseas shipment in the first half of the year is about 1GWh, and the 10GWh annual target means it needs to ship more than 9GWh in the second half of the year. Judging from the current cash reserve and financing pace, this target will most likely be reduced.

Zhang Jianhui, the chairman of the company, has a clear view of the industry's dilemma, and said publicly that the bid winning price has repeatedly hit new lows, and such disorderly competition has pushed enterprises into a "prisoner's dilemma". But the breakout method he chose is to lock in goods in advance, bet on overseas markets, and give up low-priced bids — all paths are consuming cash flow, and cash flow is exactly the scarcest resource for HyperStrong.

The true portrayal of this company is: Profits are rising, market share is being lost, inventory is piling up, and cash is being burned. No one can be sure what the future will be like.