China Galaxy Securities: New energy and new momentum moving towards a new cycle. In the future, pay close attention to investment opportunities in the lithium battery sector.

China Galaxy Securities released a research report stating that promoting consumption, expanding domestic demand, and other topics have become important macroeconomic goals this year. According to statistics, consumption is mentioned most frequently in government work reports over the past 25 years, including consumer electronics, automobiles, home goods, etc. In January, various places such as Shanghai, Nanjing, Hebei, and Hainan have clearly stated that subsidy policies will continue or even strengthen; at the same time, the active promotion of intelligent networking, charging network construction, and other measures are expected to have a positive impact throughout the year. New energy vehicles are expected to exceed expectations due to policy guidance and the improvement of high-quality supply, providing strong support. The AI-driven consumer electronics boom is expected to give a significant boost to consumer batteries. On the production side, the lithium battery industry chain has shown signs of improvement in production scheduling in January, with strong and sustainable momentum. Stable demand growth will lead to continuous repair of business performance, and the future will actively focus on investment opportunities in the lithium battery sector. Main views of China Galaxy Securities include: Energy storage priorities continue to improve, high growth labels confirmed The development of new energy storage technologies and the accelerated deployment and application of new energy storage projects are frequently mentioned in developed regions such as Shanghai, Guangdong, and the high proportion of new energy installation areas like Henan. The bank believes that the status of new energy storage in the power system is gradually receiving attention. The "Special Action Plan for Optimization of Power System Regulation Capacity (2025-2027)" in January 2025 specifically prioritizes dispatching new energy storage technologies. The focus of policies by 2025 will revolve around optimizing storage, auxiliary service markets, capacity tariffs, and electricity spot markets. The continuous release of relevant policies at the national/local level will gradually improve the profitability mechanism of various energy storage projects, with economic efficiency becoming the core driver of future energy storage development, effectively promoting the long-term benign development of the energy storage market. In addition, innovation in new energy storage technologies is also becoming an important trend, with concepts like long-duration energy storage and grid-type energy storage likely to continue catalyzing the industry. Zero/low carbon zones facilitate consumption, PV still promising In 2024, domestic wind and solar installations reached a new high, with wind and solar installations accounting for 42% by the end of 2024. The high proportion of wind and solar installations has brought about a bottleneck in the industry's development in the past two years due to the pressure of accommodating them. The attention to this issue has significantly increased in 2024. The "Notice on Renewable Energy Power Consumption Responsibility Weighting for 2024 and Related Matters" in August specified the consumption responsibilities of each province and, for the first time, set out green electricity consumption requirements for specific industries (such as aluminum electrolysis). From the government work reports of various places in 2025, the concept of promoting green consumption, zero/low carbon zones, industrial green microgrids, zero carbon communities, and villages related to green transformation is hot. In addition, projects like "transmission of Xinjiang electricity to other regions", "transmission of Mongolia electricity to Shanghai", "transmission of Qinghai electricity to Guangxi", and "Guangdong-Tibet DC transmission" will further enhance the national grid's construction and improve the national dispatching and consumption capacity. The bank believes that the alleviation of accommodation problems is conducive to the sustained and better-than-expected growth of new wind and solar installations in China, coupled with accelerated adjustments on the supply side, helping photovoltaics to quickly return to a growth trajectory. New quality production capacity in offshore wind with great elasticity, internal pricing pressure expected to ease The bank believes that the national two sessions are expected to continue to emphasize adapting measures to local conditions and vigorously develop the marine economy. Coastal provinces such as Zhejiang and Shanghai have all proposed to accelerate the development of offshore wind power. As a representative of the marine economy, offshore wind power is showing signs of improvement. The bank expects that in 2025, the high elasticity of offshore wind power will boost wind power growth. It is predicted that by 2025, onshore wind power and offshore wind power installations will reach 90-100 GW and 12-16 GW respectively, with a year-on-year growth of 25.35% and 250%. In the long term, distributed wind power and upgrades of wind turbine units coinciding with large-scale equipment updates are expected to provide new growth points for the industry. Additionally, the national two sessions may guide the industry to combat "internal competition" and stabilize prices along the wind power industry chain. The gross profit margin of wind turbine manufacturers is expected to improve in 2025, with stable component prices. Structural shortages in large megawatt wind turbines may lead to slight price increases. Synchronized calculation-electricity drives AIDC construction demand, distribution network stands to benefit The bank believes that the national two sessions are expected to continue to emphasize laying out future industries, with the "artificial intelligence+" action set to deepen. With the increase in the adoption of NVIDIA's GB200 and domestic manufacturers' higher spending on AI, coupled with the cost reduction capabilities of DeepSeek, the increased application scenarios for AI will drive strong demand for AIDC construction. This will lead to an increase in the demand for distribution network equipment such as transformers, switches, diesel generators, HVDC/UPS systems, server power supplies, and BBU/super capacitors. The bank is optimistic about the AI power supply segment. As GPU power consumption increases and rack upgrades take place, the power density and efficiency of AI server power supplies are expected to improve, leading to an increase in the value of AI server power products. DeepSeek accelerates the industrialization of human-like Siasun Robot & Automation from 0-1 As a future industry, Siasun Robot & Automation has been accelerating its layout in regions like Beijing, Shanghai, Zhejiang, Hebei, Anhui, and Sichuan. With the empowerment and drive of artificial intelligence, the Siasun Robot & Automation industry, both domestically and internationally, has entered the pre-industrialization phase, with enormous market potential. DeepSeek provides powerful inference capabilities at low cost, and the DeepSeek-VL model can help Siasun Robot & Automation achieve more precise environmental perception and understanding, enhance multimodal interaction performance, and accelerate the application and industrial development of robots. Currently, core components such as sensors, reducers, motors, and lead screws account for up to 70% of costs, leaving significant room for domestic production. As human-like Siasun Robot & Automation achieves breakthroughs from 0-1, the market space for core components such as motors and sensors is expected to open up. Acceleration of national unified electricity market, heat remains on central SOE mergers and acquisitions and market value management The bank believes that the national two sessions are expected to emphasize deepening the reform of the energy management system and accelerating the construction of a national unified electricity market. Power supply will be compatible with multiple networks and storage systems, accelerating the achievement of cross-regional balance and local balance, with long-term high demand for UHV construction leading to a booming market in 2025. The sector is expected to form a combination of performance and orders in the coming year.Dual drive. In addition, the reform of state-owned enterprises continues to deepen, and central state-owned enterprises in the electric power equipment sector can strengthen market value management through improving information disclosure, perfecting ESG management, enhancing investor relations, and other methods. At the same time, driven by electric power system reform, dual carbon policies, energy internet layout, and the "Belt and Road" initiative, central state-owned enterprises are actively maintaining their presence in the mergers and acquisitions market to accelerate focus on their core businesses and overseas expansion.Risk warning: Risks of development falling short of expectations, risks of new energy vehicle sales falling short of expectations, risks of power demand declining or insufficient new energy generation capacity, risks of resource or component shortages leading to skyrocketing raw material prices and operational difficulties for companies, risks of intensified competition leading to continuous price declines for products.