Guolian: Lithium battery equipment welcomes new opportunities, photovoltaic equipment supply and demand are expected to bottom out and reverse.

Guolian released a research report stating that due to the consistent and safety requirements of power battery products from automobile customers, the traditional liquid battery equipment update cycle is usually around 5 years. The peak period for domestic production expansion was in 2020-2021, and it is expected that 2026-2027 may usher in a small peak in the replacement of domestic lithium battery equipment. New technologies bring additional equipment demands, such as composite copper foil, 4680 large cylindrical, solid-state batteries, etc. The short-term prosperity of the photovoltaic equipment sector is expected to hit a low in 2024, mainly due to industry pressure brought about by excess capacity; with policy support, the industry supply and demand structure is expected to reach a bottom reversal in 2025, driving capital expenditure in new technologies. Guolian's main points are as follows: Lithium battery equipment: Domestic production expansion restarts, equipment welcomes new opportunities Domestic expansion bottom reversal: In 2023-2024H1, there was oversupply in the domestic lithium battery industry chain, and battery factories had a low willingness to expand in the short term. However, in 2024Q3, leading companies like Contemporary Amperex Technology and BYD Company Limited restarted expansion. In 2024Q3, a total of 25 new battery projects were launched domestically and abroad, with a total investment of over 99.1 billion yuan, planning to have power battery capacity exceeding 281GWh. 5-year equipment update cycle: Due to the consistent and safety requirements of power battery products from automobile customers, the traditional liquid battery equipment update cycle is usually around 5 years. The peak period for domestic production expansion was in 2020-2021, and it is expected that 2026-2027 may usher in a small peak in the replacement of domestic lithium battery equipment. New technologies bring additional equipment demands, such as composite copper foil, 4680 large cylindrical, solid-state batteries, etc. Photovoltaic equipment: Policy accelerates capacity clearance, supply and demand expected to bottom reversal In 2024, the short-term prosperity of the photovoltaic equipment sector is hitting a low, mainly due to industry pressure brought about by excess capacity; with policy support, the industry supply and demand structure is expected to reach a bottom reversal in 2025, driving capital expenditure in new technologies. From various aspects, new technologies in the silicon wafer section include low-oxygen single crystal furnace + tungsten diamond wire, with the single crystal furnace adding superconducting magnetic field or super large pump to solve the concentric circles and black core issues of N-type silicon wafers; the diamond wire further fine-lineizes based on the tungsten wire bus to improve the slicing rate of the silicon rod. New technologies in the battery wafer section include HJT, BC, where HJT has a double-sided symmetrical structure and BC has no gate line blocking on the front, improving the light conversion efficiency. New technologies in the component section include 0BB, stacked grid reducing silver efficiency technology, where 0BB is an upgrade of SMBB technology, eliminating the main gate and leaving only the auxiliary gate; stacked grid can be understood as a more extreme 0BB, fully replacing the main gate + auxiliary gate with a "seed layer + conducting wire," further reducing silver paste consumption. Investment recommendations: Optimistic about leading orders recovery in lithium battery equipment, pay attention to progress in new photovoltaic technologies (1) Lithium battery equipment: This round of domestic lithium battery expansion trend is clearly concentrated, as top battery factories bind top equipment manufacturers, therefore equipment leaders are expected to benefit first, suggesting to pay attention to equipment leaders with complete line supply capabilities such as Wuxi Lead Intelligent Equipment (300450.SZ), and the backend equipment leader Zhejiang HangKe Technology Incorporated (688006.SH) that has a higher proportion of overseas customers. Additionally, recommend paying attention to Suzhou Douson Drilling & Production Equipment (603800.SH), the first-mover in benefiting from the industrialization of composite copper foil, Kunshan Dongwei Technology (688700.SH) a complete line equipment supplier in the two-step process, SBT Ultrasonic Technology (688392.SH) the leader in ultrasonic roll welding equipment, Shenzhen United Winners Laser Co., Ltd (688518.SH) benefiting from the breakthrough of 4680, Hymson Laser Technology Group (688559.SH) and Guangdong Lyric Robot Automation (688499.SH) having the complete line supply capacity for solid-state batteries. (2) Photovoltaic equipment: Recommend strong technical deepening & 0BB leader equipment supplier Wuxi Autowell Technology Co., Ltd. (688516.SH), as well as the leading slice subcontractor Qingdao Gaoce Technology (688556.SH) with profits rebounding with silicon wafer prices. Suggest focusing on new battery-side technologies BC, HJT: LAPLACE Renewable Energy Technology (688726.SH), Shenzhen S.C New Energy Technology Corporation (300724.SZ), Suzhou Maxwell Technologies (300751.SZ); Component-side: the stacked grid technology leader Changzhou Shichuang Energy (688429.SH); Silicon wafer-side: single crystal furnace leader Zhejiang Jingsheng Mechanical & Electrical (300316.SZ). Risk warning: Downstream demand falls short of expectations; risks from technological iteration; risks from policy changes.