Chongqing Zongshen Power Machinery Co., Ltd. (Zongshen Power) (001696)

Equity Research Report | Industry: Small and Medium-Sized Power Machinery and Power Systems Manufacturing | Report Date: September 13, 2026 | Market and technical indicators as of the close on September 11, 2026; shareholder structure data as of June 30, 2026; margin financing data as of September 10, 2026.

This report is automatically compiled and generated by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Core Summary

Zongshen Power achieved operating revenue of RMB 12.310 billion and net profit attributable to shareholders of RMB 666 million in 2025, representing year-on-year growth of 18.55% and 44.25%, respectively. However, performance declined in the first half of 2026, with operating revenue of RMB 6.565 billion, down 1.35% year-on-year, and net profit attributable to shareholders of RMB 419 million, down 17.22% year-on-year, while net profit excluding non-recurring gains and losses fell 21.62% year-on-year. Net cash flow from operating activities during the same period was RMB 953 million, up 68.80% year-on-year, indicating some improvement in cash collection, though the profit side remained under pressure from weakness in the general machinery business, declining gross margins, and increased foreign exchange losses.

The company's current revenue and profit are still primarily driven by general machinery and motorcycle engines. In 2025, general machinery revenue was RMB 6.011 billion with net profit of RMB 457 million, and motorcycle engine revenue was RMB 4.593 billion; new energy revenue was RMB 792 million, up 36.77% year-on-year, and in the first half of 2026 new energy revenue further grew approximately 125.8% year-on-year, though its revenue scale and profit contribution remain relatively limited. Aviation power has obtained CA500 engine airworthiness approval and achieved business growth, but quantitative data such as capacity utilization rates and second-half batch orders are still lacking for verification.

The company is planning a major asset swap with its related party Loncin Motor, intending to divest motorcycle engine-related assets and acquire general machinery-related assets. As of September 12, 2026, the transaction is still in the stages of due diligence, auditing, valuation, and scheme deliberation, with no formal agreement yet signed. The scope of target assets, transaction price, cash compensation amount, and final scheme have all not been determined, and therefore their impact on business structure, profit, or valuation cannot be confirmed in advance.

As of September 11, 2026, the stock closed at RMB 15.24, down from RMB 17.04 on September 3. The closing price was below MA5, MA10, and MA20, with MACD in negative territory, indicating a weak short-term technical picture; RSI was approximately 34.24, approaching the traditional oversold reference zone but without a clear reversal signal yet. Based on public data, the company's total market capitalization is approximately RMB 17.45 billion, and the valuation has already priced in some expectation of future earnings growth, while the profit decline in the first half of 2026 increases the uncertainty of forecast realization.

2. Company Overview

2.1 Basic Information

2.2 Main Business and Product Portfolio

• General Machinery: Including 31CC to 999CC general-purpose gasoline engines, small generator sets, parking generators, RV generators, high-pressure washers, water pumps, outboard motors, micro tillers, garden management machines, lawn mowers, pallet trucks, portable energy storage, and outdoor power tools. 2025 revenue was RMB 6.011 billion, up 15.11% year-on-year; net profit was RMB 457 million, up 27.34% year-on-year, making it the largest business by revenue and profit. Products are sold to over 70 countries and regions including North America, Europe, Africa, Asia, and Oceania
• Motorcycle Engines: Including gasoline engines, diesel engines, hybrid engines, and related power systems, primarily serving motorcycle OEMs and related end customers. 2025 engine product revenue was RMB 4.593 billion, accounting for 37.33% of the company's operating revenue, up 20.30% year-on-year. Whether this business will remain within the listed company depends on the progress of the asset swap with Loncin Motor
• Aviation Power: Including small and medium-sized aviation piston engines, propellers, thermal management systems, and power generation systems, covering markets such as fixed-wing aircraft, rotary-wing UAVs, and light general aviation aircraft. The company has built five major aviation power platforms, launched over 20 derivative products and propeller products, and obtained relevant airworthiness certifications from France and Germany. In 2025, the CA500 aviation piston engine installed on the Shanhe Xinghang Aurora SA60L light sport aircraft obtained airworthiness approval from the Civil Aviation Administration of China, but this business is still in its growth stage
• New Energy: Including hairpin motors, winding motors, intelligent controllers, portable, residential, and commercial & industrial energy storage, containerized energy storage, power batteries, hydrogen fuel cell systems of 50kW and below, hydrogen-powered forklifts, park hydrogen supply systems, as well as BMS, EMS, and bidirectional inverters. 2025 new energy product revenue was RMB 792 million, accounting for 6.43% of the company's operating revenue, up 36.77% year-on-year
• High-End Components: Primarily aluminum alloy casting and precision machining, applied in automotive four-wheel-drive systems and transmissions, new energy vehicle electric drive systems, engines and motorcycle power systems, and general power machinery. 2025 product component revenue was RMB 563 million, accounting for 4.57% of operating revenue, up 11.22% year-on-year. The company disclosed an annual aluminum alloy casting capacity of approximately 22,000 tons and an annual aluminum alloy component machining capacity of approximately 20 million pieces

2.3 Industry Chain Position and Cost-Profit Structure

Zongshen Power currently occupies a position of "midstream power machinery manufacturing plus partial end-product integration." Its core traditional business relies on scale manufacturing, supply chain integration, product mix, and cost control, while aviation power, new energy, and high-end components are growth-oriented or upgrade-oriented businesses. The company is neither an upstream resource enterprise with resource pricing power nor fully a downstream consumer goods enterprise with strong brand premiums.

• General machinery and engines primarily procure aluminum alloys, steel, copper, plastics, rubber, bearings, gears, and electronic control components; high-end aluminum alloy components also require aluminum ingots, aluminum alloy materials, and machining consumables.
• Inputs required for energy storage, electric drive, and hydrogen energy businesses include lithium-ion batteries, battery cells, BMS, PCS, EMS, power devices, and other electronic components.
• According to the 2025 Annual Report, raw materials account for 94.17% of engine product costs and 82.91% of new energy product costs; the company's cost structure is relatively sensitive to raw material prices, outsourced processing prices, exchange rates, and logistics costs.
• The top five suppliers accounted for RMB 1.407 billion in procurement in 2025, representing 14.91% of total annual procurement. This data reflects a single disclosure basis for 2025, and no multi-year cross-referenced data on the same basis was found; specific figures should be based on the latest annual report.
• The company has limited bargaining power over bulk raw materials and standardized components, functioning more as a price taker; it can reduce unit costs through scale procurement, supply chain integration, automation, and product mix upgrades, but cannot fully pass through raw material price increases.
• Downstream customers include motorcycle OEMs and power system customers, general machinery brand owners and distributors, agricultural and garden machinery customers, construction and emergency rescue end users, automotive and new energy vehicle component Tier 1 suppliers, energy storage system integrators, residential and commercial & industrial customers, and light sport aircraft, UAV, and general aviation aircraft manufacturers.
• In 2025, domestic sales revenue was RMB 6.488 billion, accounting for 52.71%; export sales revenue was RMB 5.821 billion, accounting for 47.29%. With export revenue approaching half of total revenue, the company faces risks from exchange rates, tariffs, trade frictions, overseas certifications, and regional demand fluctuations.
• The top five customers accounted for RMB 2.695 billion in sales in 2025, representing 21.90% of total annual sales; the largest customer accounted for 5.85%. The company has not disclosed all customer names, and some customer structure and specific bargaining relationships cannot be fully verified; this data reflects a single-year disclosure basis for 2025, and specific figures should be based on the latest annual report.
• Standardized general machinery products face relatively full competition, and large overseas channel partners and brand owners have strong bargaining power; motorcycle engine OEM customers have high requirements for price, delivery, quality, and customized development.
• The high-end automotive components business typically faces annual customer price reductions and cost transfer pressure; energy storage and new energy businesses can achieve some premium through system integration, software control, certifications, and overseas channels, but core inputs such as battery cells and power devices may still bring significant cost pressure.
• Aviation power has barriers in airworthiness certification, reliability verification, integration适配, maintenance and after-sales, and batch delivery. If commercial batch delivery is achieved, customer stickiness and bargaining power may be higher than traditional general machinery, but the current business scale remains limited.
• As of December 31, 2025, accounts receivable book balance was RMB 1.931 billion, accounting for approximately 15.69% of 2025 operating revenue; of this, accounts receivable within one year totaled RMB 1.909 billion, accounting for the vast majority. During the same period, accounts payable balance was RMB 1.731 billion and contract liabilities balance was RMB 123 million. Accounts receivable are slightly higher than accounts payable, indicating the company needs to extend certain credit terms to downstream customers, but has not yet shown abnormally severe long-term accounts receivable issues. The above ratios are calculated based on annual report book data and cannot replace a complete accounts receivable turnover and cash conversion cycle analysis.
• In 2025, the top five customers accounted for 21.90% of total sales, and the top five suppliers accounted for 14.91% of total procurement, indicating a relatively diversified customer and supplier structure overall. However, the company's business depends on overseas markets, OEMs, and large channels, and concentration ratios alone cannot determine that the company has strong pricing power. Customer concentration, supplier concentration, and accounts receivable data are all based on single-year disclosure, and some have not been cross-verified through multi-year or independent third-party sources.

The company occupies a position in the lower-middle section of the smile curve in power machinery manufacturing and system integration. Gross margins for traditional engine and general machinery businesses are at low-to-medium levels, relying primarily on scale manufacturing and cost control. Future margin improvement depends mainly on increasing the proportion of general machinery end products, proprietary brands, and differentiated products; commercialization of aviation piston engines; scaled delivery of energy storage, electric drive, and hydrogen energy; enhancement of precision machining and system integration capabilities for high-end components; and easing of raw material, exchange rate, logistics, and overseas tariff pressures.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The 2026 Semi-Annual Report was disclosed on August 29, 2026; H1 2026 net profit excluding non-recurring gains and losses was RMB 382.27 million, down 21.62% year-on-year, and basic earnings per share was RMB 0.3656, down 17.21% year-on-year. H1 2026 net cash flow from operating activities was RMB 953.42 million, up 68.80% year-on-year. FY 2025 net profit excluding non-recurring gains and losses was RMB 629.18 million, up 42.44% year-on-year, and basic earnings per share was RMB 0.5812, up 44.25% year-on-year.

In 2025, the company achieved relatively rapid growth in both revenue and profit; in H1 2026, revenue declined slightly and profit fell significantly, with pressure from the traditional general machinery business, declining gross margins, and increased foreign exchange losses weighing on performance. In H1 2026, general machinery revenue was RMB 2.93976 billion, down approximately 19.3% year-on-year; engine revenue was RMB 2.52580 billion, up approximately 8.7% year-on-year; new energy revenue was RMB 591.57 million, up approximately 125.8% year-on-year; and product component revenue was RMB 247.91 million, down approximately 13.5% year-on-year. The new energy business is growing rapidly but remains small in scale, and its profit contribution and sustainability still need to be verified by subsequent financial reports.

3.2 Earnings Forecast

The above represents the average forecast of two institutions, Huachuang Securities and Guosen Securities, as displayed on the Hithink RoyalFlush earnings forecast page as of September 10, 2026. The sample size is small and cannot be regarded as a broad multi-institution consensus. Huachuang Securities' individual forecasts are: 2026-2028 operating revenue of RMB 13.939 billion, RMB 15.891 billion, and RMB 18.036 billion, net profit attributable to shareholders of RMB 892 million, RMB 1.102 billion, and RMB 1.311 billion, and EPS of RMB 0.78, RMB 0.96, and RMB 1.15; Guosen Securities' individual forecasts are: operating revenue of RMB 14.550 billion, RMB 15.764 billion, and RMB 18.664 billion, net profit attributable to shareholders of RMB 868 million, RMB 1.192 billion, and RMB 1.460 billion, and EPS of RMB 0.76, RMB 1.04, and RMB 1.27.

3.3 Valuation Level and Institutional Ratings

As of the close on September 11, 2026, the company's stock price was RMB 15.23, and based on total share capital of approximately 1.14503 billion shares, total market capitalization was approximately RMB 17.44 billion; public market data shows a TTM P/E of approximately 30.16x, P/B of approximately 3.15x, and total market capitalization of approximately RMB 17.4 billion. Based on the average forecast EPS from the two institutions, the current stock price corresponds to 2026-2028 forecast P/E ratios of approximately 19.8x, 15.2x, and 12.6x. The current TTM P/E is approximately 30x, while the 2026 forecast P/E is approximately 20x, indicating that the market has already priced in some expectation of future earnings growth. Recent brokerage reports generally did not disclose explicit target prices, and theoretical prices derived from forecast P/E should not be treated as formal target prices; the target price of RMB 21.09-24.10 given in Guosen Securities' April 2025 report was published relatively early and should not be used as the latest target price as of September 2026. Valuation data is as of September 11, 2026, and financial data is as of June 30, 2026; the different time points mean that P/E and P/B will change with stock price and financial report updates. The company's 2025 operating revenue has two bases: RMB 12.30954 billion and approximately RMB 12.396 billion from some databases; for formal reports, it is recommended to prioritize the operating revenue basis disclosed in the company's annual report. Institutional forecasts cover only Huachuang Securities and Guosen Securities, and actual profit declined year-on-year in H1 2026, creating uncertainty in forecast realization; if the traditional general machinery business continues to languish or aviation power, AIDC power, and new energy businesses ramp up slower than expected, the current valuation margin of safety is relatively limited.

4. Recent News and Announcements

4.1 Planning Major Asset Swap and Related-Party Transaction, Still in Scheme Deliberation Stage

On September 12, 2026, the company disclosed a progress announcement on the major asset swap and related-party transaction. Zongshen Power intends to swap its motorcycle engine business-related assets and liabilities, with the core target being equity in Chongqing Zongshen Engine Manufacturing Co., Ltd., with general machinery business-related assets and liabilities held by Loncin Universal Power Co., Ltd., with the core target being equity in Chongqing Xinlongxin Electromechanical Co., Ltd., with the difference in transaction consideration to be compensated in cash by one party to the other. Loncin Motor is controlled by the company's actual controller Zuo Zongshen, making this transaction a related-party transaction and expected to constitute a major asset restructuring, but it will not result in a change of the company's controlling shareholder or actual controller. As of September 12, 2026, core elements such as the scope of target assets and transaction price have not been finalized, the transaction parties have not signed an agreement, and due diligence, auditing, valuation, and scheme deliberation are still ongoing, with subsequent decision-making and approval procedures still required. This matter involves significant uncertainty, and profit accretion or business synergy effects cannot be confirmed at this time. Source: https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12597133&stockid=001696

4.2 Major Asset Swap Matter Continues to Be Disclosed with Progress, Has Not Yet Entered Formal Agreement Signing Stage

Since the company issued an indicative announcement on February 14, 2026, it has continued to disclose relevant progress on March 14, April 14, May 14, June 13, July 13, August 13, August 28, and September 12, 2026. As of now, the announcement content mainly involves due diligence, auditing, valuation, and scheme deliberation, and the transaction parties have not signed a formal agreement. The transaction scale, valuation, cash compensation amount, agreement signing time, and approval results have all not been determined.

4.3 Director Hu Xianyuan's Share Reduction Plan Period Expired, Cumulatively Reduced 44,144 Shares

On September 1, 2026, the company disclosed an announcement on the expiration of a director's share reduction plan period and the reduction results. Hu Xianyuan originally planned to reduce holdings through centralized bidding of no more than 44,144 shares, representing approximately 0.0039% of the company's total share capital, during the period from June 1, 2026 to August 31, 2026; actually cumulatively reduced 44,144 shares at an average reduction price of RMB 14.91 per share, representing approximately 0.0039% of total share capital, with the shares sourced from centralized bidding purchases. After the reduction, Hu Xianyuan's holdings decreased from 176,575 shares (0.0154% of total share capital) to 132,431 shares (0.0116% of total share capital); unrestricted shares decreased from 44,144 shares to 0 shares, with remaining shares all being restricted shares. The company stated that this reduction is not related to the major asset swap planning matter, will not result in a change of control, and will not affect the company's governance structure or going concern. Source: https://money.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12577553&stockid=001696

4.4 No Formal Share Buyback Plan Yet, Buyback Plan Still Depends on Market Conditions and Company Arrangements

As of September 12, 2026, no newly disclosed share buyback plan, buyback progress, or buyback completion announcement by the company in September 2026 was found. At the semi-annual results briefing on September 4, 2026, regarding the second-half buyback plan, the company replied that it would decide whether to launch a buyback plan based on market conditions and the company's overall arrangements; this statement does not constitute a commitment to implement or definitively implement a buyback. The company implemented its 2025 profit distribution plan in H1 2026, distributing a cash dividend of RMB 2.00 per 10 shares (including tax), totaling approximately RMB 229 million in cash dividends, accounting for 34.41% of the 2025 net profit attributable to shareholders of the listed company. This matter constitutes a cash dividend and should not be confused with share buybacks.

4.5 H1 2026 Revenue and Net Profit Attributable to Shareholders Declined Year-on-Year, Operating Cash Flow Improved Significantly

The company disclosed its semi-annual report on August 29, 2026. H1 2026 operating revenue was RMB 6.565 billion, down 1.35% year-on-year; net profit attributable to shareholders of the listed company was RMB 419 million, down 17.22% year-on-year; net profit excluding non-recurring gains and losses was RMB 382 million, down 21.62% year-on-year; net cash flow from operating activities was RMB 953 million, up 68.80% year-on-year. The company stated that H1 performance was affected by cyclical fluctuations in the general machinery industry, exchange rate fluctuations, and rising raw material prices; the motorcycle engine business maintained steady growth, and emerging businesses such as aviation power and new energy accelerated ramp-up. Based on the search results described in the research notes, no newly published 2026 annual earnings forecast, positive earnings alert, or negative earnings alert by the company in September 2026 was found. Source: https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12567513&stockid=001696

4.6 Investor Relations Activity Confirms Asset Swap Still Under Communication, AIDC Business Revenue Contribution Small

On September 7, 2026, the company disclosed the investor relations activity record for the 2026 semi-annual results briefing, which was held on September 4, 2026 via online remote means through Panorama Network. The company confirmed that due diligence, auditing, and valuation for the asset swap have not been completed, and the transaction scheme, asset scope, transaction pricing, and agreement terms are still under communication and negotiation, with no agreement signed by the transaction parties. Regarding the AIDC high-voltage direct current power supply and energy storage business, the company stated that the related business is still in an early stage with a small revenue contribution, and future development is uncertain; it cannot be concluded at this time that large-scale AI data center orders or performance contributions have been formed. Source: https://file.finance.sina.com.cn/211.154.219.97:9494/MRGG/CNSESZ_STOCK/2026/2026-9/2026-09-07/12586707.PDF

4.7 Aviation Power Business Improved Year-on-Year, but CA500 Capacity Utilization and Second-Half Orders Lack Quantitative Data

At the semi-annual results briefing on September 4, 2026, the company stated that H1 2026 aviation power business revenue and profit achieved significant year-on-year improvement, with customers including Caihong, Yilong, Feihong, Xi'an ASN, etc. The company did not disclose quantitative data on CA500 engine capacity utilization or specific second-half batch orders, and related business growth still needs to be verified by subsequent orders, deliveries, and financial data. The company also explicitly replied that there is no matter related to joint eVTOL development with Seres, and the Zongshen Power-Seres eVTOL cooperation cannot be treated as a confirmed matter. Source: https://file.finance.sina.com.cn/211.154.219.97:9494/MRGG/CNSESZ_STOCK/2026/2026-9/2026-09-07/12586707.PDF

4.8 Specific Table Data on Related-Party Fund Occupation Missing, No September Regulatory Penalty Announcements Found

The company disclosed the 2026 semi-annual summary table of controlling shareholder and other related-party fund occupation on August 29, 2026, but the announcement page body did not display specific table data; specific details should be based on the original attachment. As of the search time described in the research notes, no announcements of administrative penalties, disciplinary actions, or regulatory measures by securities regulatory authorities against the company in September 2026 were found; regulatory information should still be based on subsequent formal announcements from the Shenzhen Stock Exchange and Cninfo. The company also disclosed that in H1 2026, it completed the formulation or revision of 18 core systems in accordance with the Company Law and new regulatory rules, and continued to improve board specialized committees and internal control mechanisms. Source: https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12567516&stockid=001696

5. Stock Price Trend and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

Zongshen Power's closing price as of September 11, 2026 was RMB 15.24, having recently declined from RMB 17.04 on September 3, with the closing price below MA5, MA10, and MA20, and MACD in negative territory showing weak short-term technical signals. RSI(14) is approximately 34.24, approaching the traditional oversold reference zone but without a clear reversal signal yet. The stock price is below the Bollinger middle band of RMB 15.80 and above the lower band of RMB 14.42, in a weak consolidation state in the lower-middle portion in the short term. In terms of funds, on September 11, super-large and large orders combined net outflow was approximately RMB 28.7443 million, while small orders net inflow was approximately RMB 71.5540 million; attention should be paid to whether subsequent volume and large fund flows can improve.

5.3 Short-Term Outlook (Next Week, Scenario Analysis, for Reference Only)

⚠️ Risk Warning: The following content is purely a subjective scenario analysis based on September 11, 2026 closing data, historical prices, and technical indicators. It does not constitute investment advice and does not represent a deterministic prediction of future prices.

① Key Technical Levels

② Next Week Scenarios (Subjective Weighting, Not Statistical Probability)

• Sideways Consolidation (relatively high subjective weighting, approximately 60%; not statistical probability): Price range approximately RMB 15.10-16.10. Trigger conditions include holding near RMB 15.10, volume maintained at approximately 35-65 million shares, large fund net outflow not continuing to expand, and no obvious systemic weakness in related markets and themes such as general equipment, low-altitude economy, and aviation power. If realized, focus on the Bollinger middle band of RMB 15.80 and MA5/MA10 resistance near RMB 16.0.
• Weaker Downside (moderate subjective weighting; not statistical probability): Price range approximately RMB 14.40-15.10. Trigger conditions include closing price effectively breaking below RMB 15.10, volume at the break significantly higher than recent normal levels, continuous net outflow from super-large and large orders, or continued overall weakness in related thematic sectors and Shenzhen mid-cap stocks. If the RMB 14.40-14.60 area also breaks on increased volume, the risk of the price approaching the 52-week low of RMB 13.57 should be monitored.
• Rebound and Strengthening (relatively low subjective weighting; not statistical probability): Price range approximately RMB 16.10-16.70. Trigger conditions include reclaiming the Bollinger middle band of RMB 15.80, further breaking above MA5 and MA10 resistance near RMB 16.10, single-day volume recovering to above 70 million shares or turnover significantly exceeding the recent level of approximately RMB 600 million, while super-large and large fund flows shift from net outflow to sustained net inflow, and positive catalysts emerge from asset swap progress or themes such as aviation power and low-altitude economy.

③ Fund and Liquidity Background

As of September 11, 2026, the turnover rate was approximately 4.34%, turnover was approximately RMB 592 million, and volume was approximately 38.68 million shares; the average volume from September 2 to September 11, 2026 was approximately 57.56 million shares. The top ten circulating shareholders collectively held approximately 32.39%, and institutional holdings were approximately 35.72%, of which funds accounted for approximately 6.29% and QFIIs approximately 2.36%, with funds and QFIIs together accounting for approximately 8.65%. Shareholder data is as of June 30, 2026, with a quarterly lag; during this period, stock price fluctuations, shareholder reductions, and asset swap-related news may all cause structural changes. Zongshen Power is not a low-turnover small-cap stock and has certain buy-sell absorption capacity under normal trading conditions; however, volume from September 2 to September 4 reached approximately 87 million to 102.4 million shares before declining, indicating that previously active funds have cooled somewhat. On September 11, super-large and large orders combined net outflow was approximately RMB 28.74 million, while small orders net inflow was approximately RMB 71.55 million, showing a short-term pattern of large funds selling and retail investors absorbing.

A checkable volume confirmation signal is: if subsequent single-day volume returns to above 70 million shares, turnover significantly exceeds RMB 800 million, and the stock price simultaneously recaptures the RMB 15.80-16.10 range, this can be viewed as an observation signal of short-term funds becoming active again; if increased volume occurs when the price breaks below RMB 15.10, it more likely represents selling pressure release rather than active entry.

④ Points to Watch (Observation Ideas Only, Not Trading Instructions)

• Observe whether the RMB 15.10-15.25 area can form effective support, and whether the price moves toward the RMB 14.40-14.60 area after breaking below RMB 15.10. The above are observation ideas, not trading instructions.
• Observe whether the stock price can reclaim the Bollinger middle band of approximately RMB 15.80 and further face MA5 and MA10 resistance near RMB 16.10. The above are observation ideas, not trading instructions.
• Observe whether a breakout near RMB 16.10 is accompanied by single-day volume reaching above 70 million shares and turnover significantly exceeding RMB 800 million. The above are observation ideas, not trading instructions.
• Observe whether super-large and large fund flows can shift from net outflow to sustained net inflow, and distinguish between the different implications of increased volume on an upswing versus increased volume breaking below RMB 15.10. The above are observation ideas, not trading instructions.

The above scenario analysis is based on September 11, 2026 closing data and historical prices and technical indicator calculations. Short-term stock prices will also be affected by multiple factors including news, fund flows, and the broader market environment. Technical indicators themselves have lag and limitations, do not guarantee actual future movements, and do not constitute buy or sell recommendations. Please make independent judgments based on the latest market information and bear investment risks yourself.

6. Industry Landscape and Competitor Analysis

6.1 Industry Status

The company's industry covers general machinery and small power equipment, motorcycle engines, aviation piston engines, energy storage and new energy power, and high-end aluminum alloy components. The general small power machinery industry presents a pattern of "one superpower and multiple strong players, with domestic and foreign competitors on the same stage"; motorcycle engine competition is relatively full; aviation piston engine barriers are concentrated in airworthiness certification, reliability, and batch delivery; the energy storage and new energy industry has many competitors, with intense price competition in battery cells, inverters, and power electronic devices.

6.2 Competitive Landscape

• General machinery demand mainly comes from small generator sets, garden machinery, agricultural irrigation and plant protection machinery, high-pressure cleaning equipment, small construction machinery, outdoor emergency and backup power, portable energy storage, and power tools.
• General machinery industry trends include fuel power energy conservation and emission reduction, electrification, intelligentization, end-product integration, and overseas localized production. The competitive focus is shifting from simply supplying engines to engines plus end equipment, brands, and channels.
• In 2025, Zongshen Power had a 31CC to 999CC general-purpose gasoline engine product portfolio and is extending into energy storage, power tools, and end equipment.
• The motorcycle engine industry is affected by motorcycle sales, export markets, raw materials, and customer concentration; Southeast Asian, African, and Latin American markets bring export growth, with above-250cc large-displacement engines and off-road power growing relatively fast, while facing long-term substitution pressure from electrification and hybridization.
• Aviation piston engine industry barriers include airworthiness certification, long-term reliability and durability verification, aircraft integration, maintenance and after-sales systems, joint development, batch delivery, and quality traceability capabilities. The company has obtained some overseas airworthiness certifications, and the CA500 engine obtained domestic light sport aircraft airworthiness approval in 2025, but it is still in the market cultivation and order ramp-up stage.
• The upstream battery cells, inverters, and power electronic devices in the energy storage and new energy industry have a high degree of standardization, with intense price competition. The company's relative advantages lie in traditional power machinery manufacturing capabilities, overseas customer base, and PCS, BMS, EMS system integration capabilities; however, new energy revenue accounts for only 6.43% and has not yet formed a substitute profit contribution to traditional businesses.
• As of September 12, 2026, Zongshen Power and Loncin Motor are planning an asset swap. The transaction has not been completed, and the post-swap business basis cannot be used in advance for valuation comparison.

6.3 Main Competitors

Compared to Senci Electric Machinery and Lutian Machinery, Zongshen Power has broader business coverage including general machinery, motorcycle engines, aviation power, new energy, and high-end components, but its traditional businesses still have strong manufacturing attributes and sensitivity to raw material costs; compared to Loncin Motor, the two parties have significant business overlap, and the asset swap may change future business boundaries and comparable basis; CFMOTO and Qianjiang Motorcycle are mainly used for supplementary comparison in motorcycle power business; Huasheng Zhongtian can be observed as a general machinery industry competitor, but due to being non-listed and having limited public data, comparison conclusions have limitations.

7. Risk Warnings

• The general machinery business faces relatively obvious cyclical and demand fluctuation risks. H1 2026 general machinery revenue declined approximately 19.3% year-on-year; if overseas garden machinery, generator set, agricultural, and outdoor equipment demand continues to be weak, it may continue to drag on revenue and profit.
• The company's cost structure is relatively sensitive to raw material prices. In 2025, raw materials accounted for 94.17% of engine product costs and 82.91% of new energy product costs; rising costs of aluminum alloys, steel, copper, battery cells, and power devices may compress gross margins, and the company has limited bargaining power over bulk raw materials.
• Overseas business revenue accounts for a relatively high proportion. In 2025, export revenue was RMB 5.821 billion, accounting for 47.29% of operating revenue; the company may be affected by exchange rate fluctuations, foreign exchange losses, tariffs, trade frictions, overseas certifications, and changes in logistics costs; exchange rate fluctuations and foreign exchange losses in H1 2026 have already weighed on performance.
• The major asset swap involves transaction uncertainty. This matter is a related-party transaction and is expected to constitute a major asset restructuring, but as of September 12, 2026, no formal agreement has been signed, and the target scope, valuation, transaction price, cash compensation amount, and approval results have all not been determined. The transaction may be delayed, adjusted, or fail to complete, and synergy or profit accretion effects cannot be confirmed in advance.
• The motorcycle engine business faces the risk of changing business boundaries. This business had 2025 revenue of RMB 4.593 billion, accounting for 37.33% of the company's operating revenue. Whether it will remain within the listed company depends on the progress of the asset swap; if the transaction scheme changes, the company's revenue structure, profit sources, and historical comparable basis may change significantly.
• The aviation power business is still in the growth and market cultivation stage. Although the CA500 engine has obtained relevant airworthiness approval and H1 2026 revenue and profit improved year-on-year, the company has not disclosed CA500 capacity utilization or specific second-half batch orders, and subsequent commercial ramp-up and profit contribution are uncertain.
• The high growth of new energy and AIDC-related businesses has not yet equated to large-scale profit contribution. H1 2026 new energy revenue grew approximately 125.8% year-on-year, but the AIDC high-voltage direct current power supply and energy storage business is still in an early stage with a small revenue contribution; if order implementation or profitability falls short of expectations, it may be difficult to offset fluctuations in traditional businesses.
• The current valuation has already priced in some expectation of future earnings growth. Based on the average forecasts from two institutions, the stock price corresponds to 2026-2028 forecast P/E ratios of approximately 19.8x, 15.2x, and 12.6x; if the traditional general machinery business continues to languish, or aviation power and new energy ramp-up falls short of expectations, institutional earnings forecasts and the valuation digestion process may face downward revision pressure.

8. Conclusion and Outlook

Zongshen Power's medium-term growth logic mainly comes from general machinery product mix and overseas market expansion, aviation power commercialization, new energy and energy storage system integration, and enhancement of high-end component and precision machining capabilities. In 2025, general machinery and engine gross margins were 15.30% and 10.50%, respectively, showing year-on-year improvement; however, H1 2026 general machinery revenue declined approximately 19.3% year-on-year, indicating that cyclical fluctuations in traditional businesses still have a significant impact on overall performance. The institutional average forecast for 2026-2028 net profit attributable to shareholders is approximately RMB 880 million, RMB 1.147 billion, and RMB 1.386 billion, but the sample includes only Huachuang Securities and Guosen Securities, and actual profit declined in H1 2026, requiring subsequent verification through orders, deliveries, and profit data.

The asset swap may change the company's future business boundaries and comparable basis, making it an important variable affecting subsequent performance assessment, but the transaction has not yet entered the formal agreement signing stage, and the proposed acquired businesses cannot be directly incorporated into current valuation or earnings judgments. The company's future performance depends on general machinery demand recovery, engine business stability, new energy and aviation power ramp-up, and changes in raw materials, exchange rates, logistics, and overseas trade environment. Technically, RMB 15.10-15.25 is an important recent observation range, approximately RMB 15.80 is the Bollinger middle band, and approximately RMB 16.10 corresponds to short-term moving average resistance; these prices only reflect historical technical patterns and cannot replace fundamental judgment.

Overall, the company has a foundation in scale manufacturing of traditional power machinery and possesses business upgrade directions in aviation power, new energy, and high-end components, but it is currently still in a stage of traditional business under pressure, new business contributions being gradually verified, and the major asset swap scheme undetermined. Future focus should be on the formal scheme and approval progress of the asset swap, general machinery revenue and gross margin recovery, order and profit contributions from new energy and aviation power, and whether institutional forecasts can be realized.

Data Sources

• Zongshen Power (001696)_Company Announcements_Zongshen Power: 2025 Annual Report_Sina Finance_Sina.com
• Chongqing Zongshen Power Machinery Co., Ltd. 2025 Annual Report Full Text
• Zongshen Power (001696)_Company Announcements_Zongshen Power: Progress Announcement on Planning Major Asset Swap and Related-Party Transaction_Sina Finance_Sina.com
• Zongshen Power (001696)_Company Announcements_Zongshen Power: 2025 Annual Report_Sina Finance_Sina.com
• Chongqing Zongshen Power Machinery Co., Ltd. 2023 Annual Report Full Text
• Zongshen Power (001696)_Company Announcements_Zongshen Power: 2024 Annual Report_Sina Finance_Sina.com
• Chongqing Zongshen Power Machinery Co., Ltd.
• Loncin Motor (603766)_Company Announcements_Loncin Motor: 2025 Annual Report_Sina Finance_Sina.com
• Senci Electric Machinery Co., Ltd. 2025 Annual Report
• Lutian Machinery (605259)_Company Announcements_Lutian Machinery: 2025 Annual Report_Sina Finance_Sina.com
• Xiaojingji-Zongshen Power
• Zongshen Power (001696)_Company Announcements_Zongshen Power: 2026 Semi-Annual Report_Sina Finance_Sina.com
• Zongshen Power (001696)_Company Announcements_Zongshen Power: 2025 Annual Report Summary_Sina Finance_Sina.com
• Zongshen Power (001696) Earnings Forecast_F10_Hithink RoyalFlush Financial Services Network
• Guosen Securities-Zongshen Power (001696) 2025 Net Profit Up 44% Year-on-Year, Actively Positioning in Low-Altitude Economy-260522.pdf
• Zongshen Power (001696) 2026 Semi-Annual Report Review: Traditional General Machinery Business Under Short-Term Pressure, AIDC Power and Aviation Power Open New Growth Space__Sina Finance_Sina.com
• Zongshen Power (001696) 2026 Semi-Annual Report Review: Traditional General Machinery Business Under Short-Term Pressure, AIDC Power and Aviation Power Open New Growth Space__Sina Finance_Sina.com
• Research Report Indicator Express-Research Reports-Stock Channel-Securities Star
• Guosen Securities-Low-Altitude Economy Industry Special Series II: Market Space, Technology Trends, and Industry Chain Opportunities in eVTOL Power Systems-250417.pdf
• Zongshen Power (001696) Stock Historical Data: Historical Quotes, Prices, Trend Charts_Investing.com
• Zongshen Power (001696) Stock Information - Data Platform
• Zongshen Power (001696)_Company Announcements_Zongshen Power: Progress Announcement on Planning Major Asset Swap and Related-Party Transaction_Sina Finance_Sina.com
• Zongshen Power (001696)_Company Announcements_Zongshen Power: Announcement on Expiration of Director's Share Reduction Plan Period and Reduction Results_Sina Finance_Sina.com
• https://file.finance.sina.com.cn/211.154.219.97%3A9494/MRGG/CNSESZ_STOCK/2026/2026-9/2026-09-07/12586707.PDF
• Zongshen Power (001696)_Company Announcements_Zongshen Power: Summary Table of Controlling Shareholder and Other Related-Party Fund Occupation for H1 2026 of Listed Company_Sina Finance_Sina.com
• Zongshen Power (001696) Latest Developments_F10_Hithink RoyalFlush Financial Services Network
• Zongshen Power (001696) Stock Historical Data: Historical Quotes, Prices, Trend Charts_Investing.com
• Zongshen Power (001696) Stock Latest Price Quotes, Real-Time Trend Charts, Stock Price Analysis and Forecast_Investing.com
• Zongshen Power (001696) Stock Quote Trend Technical Analysis_Future Forecast_Buy Sell Operation Suggestions_Investing.com
• Zongshen Power (001696)_Fund Flows_Securities Star

This report is automatically retrieved, compiled, and generated by AI based on publicly available channel information, with information as of: market and technical indicators as of the close on September 11, 2026; shareholder structure data as of June 30, 2026; margin financing data as of September 10, 2026. There may be timeliness differences, and specific data should be based on the company's formal announcements and authoritative data terminals. This report is for information compilation and research reference only, does not constitute any investment advice, and investors should make independent judgments and bear investment risks themselves.