Eve Energy Reports Q3 Earnings Decline Amid Major Shareholder's $3 Billion Cash-Out; Low Gross Margin and R&D Spending Raise Concerns Over Financing Strategy

Eve Energy Co.,Ltd. recently announced that its controlling shareholders and concerted actors, including Liu Jincheng, Luo Jinhong, and Eve Holding, plan to transfer 40.78 million shares at CNY 72.20 per share, totaling a cash-out of approximately CNY 2.94 billion. This move comes just one day after the company released its Q3 2025 financial report, which revealed mixed performance metrics.

In the first three quarters of 2025, Eve Energy reported revenue of CNY 45 billion, marking a 32.17% year-on-year increase. However, net profit attributable to shareholders declined by 11.70% to CNY 2.82 billion. Despite the broader lithium battery industry's recovery, Eve Energy's non-GAAP net profit saw the steepest drop among leading peers like CATL, Guoxuan High-Tech, and Sunwoda.

Key financial indicators raise concerns about the company's competitiveness. Eve Energy's gross margin stood at 15.95% for the period, significantly lower than CATL and below Guoxuan High-Tech and Sunwoda. Additionally, its R&D expense ratio of 4.16% lags behind competitors' 5.3%-7.4% range. The company's cash collection ratio has consistently remained below 80%, reflecting potential weaknesses in product market competitiveness and pricing power.

Since 2019, Eve Energy has accelerated financing efforts to support expansion, completing three private placements and one convertible bond issuance totaling nearly CNY 20 billion. However, continuous capacity expansion has driven interest-bearing liabilities to CNY 32.4 billion by Q3 2025, with a debt-to-asset ratio reaching a record high of 63.5%.

In June 2025, Eve Energy announced plans for a Hong Kong IPO, aiming to enhance capital strength and global competitiveness. Yet, market observers question whether perpetual financing can fundamentally resolve the company's operational and financial challenges.

The timing of major shareholders' substantial cash-out amid weak earnings recovery warrants close market attention, as it coincides with persistent profitability concerns and heavy reliance on external financing.