Sinolink: Breakthrough in solid-state battery technology & surge in energy storage demand, optimistic about the entire lithium battery industry chain.

Sinolink's research report states that at the current critical juncture of energy structure transformation, the lithium battery industry chain is experiencing unprecedented development opportunities, with its core DRIVE coming from the resonance of technological revolution and market demand. In terms of technology, the substantial breakthrough in solid-state battery technology is restructuring the industry's ceiling. In terms of the market, the explosive growth of the global energy storage market is providing the lithium battery industry with capacity space beyond expectations. The breakthrough in technology and the explosion in demand form a positive cycle. Energy storage systems are highly sensitive to cycle life and cost, which is exactly the next stage goal that solid-state battery technology can address on a large scale; and the huge application scenarios and capital flow provided by the energy storage market, in turn, accelerate the research and industrialization process of advanced technologies such as solid-state batteries. The lithium battery industry chain is expected to undergo a revaluation of value in this wave. Sinolink's main points are as follows: Lithium batteries: Resonance of prosperity and new technology presents diversified investment opportunities By 2025, the breakthrough of solid-state battery technology will drive industry Capex growth, and with the continuous supply-side reform and capacity convergence from 2023 to 2025, the prosperity of energy storage may exceed expectations, leading to a reversal in the industry's supply and demand pattern. Prices are rising in multiple links, and the industry chain is flourishing in prosperity. Cycle: The midstream of the lithium battery industry will enter the "recovery-prosperity" stage in 2024-2025, corresponding to sector restocking. Since bottoming out in 1Q24, both revenue and inventory have been in an upward phase, with the prosperity phase of the lithium battery sector's inventory cycle in 3Q25. Growth: Resonance of new technology and new scenarios opens up a second growth pole for lithium batteries. New technology is the main theme of the sector, with solid-state batteries as a long-term technology direction, playing a strategically important role in bringing about the reshaping of process and material systems. Starting from 2025, the construction of a solid-state pilot line will gradually transition to mass production, and the development path/supply chain will become clearer; composite copper foil as a disruptive technology, after many years of technological breakthroughs and polishing, is expected to see true industrialization in 25H2, with production rhythms, penetration space, and application in solid-state batteries all likely to exceed market expectations. In addition, the cultivation of new scenarios will nurture future growth poles, with demands in markets such as data centers, low-altitude economy, humanoid Siasun Robot & Automation, and overseas expansion. Along with the stabilization of the lithium battery main business, sector companies are positioning themselves for a second growth curve. Structure: Leading products and cost competitiveness are evident, and the industry will continue to fill the capacity utilization rate of the top players with the most optimal production capacity, with the highest certainty and the strongest resilience in achieving performance. As the lithium battery supply and demand in all sectors enter a new turning point starting in 2H25, it is worth paying attention to high-demand sectors with expected price increases, such as lithium hexafluorophosphate, energy storage batteries, and separators. Tracking of November's pre-production situation in the industry chain: Domestic battery sample companies: 144.14 GWh, a month-on-month increase of +1.76%. Overseas battery sample companies: 24.4 GWh, unchanged month-on-month. Cathodes: 176,600 tons, a month-on-month increase of +7.35%. Anodes: 155,000 tons, a month-on-month decrease of -1.89%. Separators: 1.89 billion square meters, a month-on-month increase of +3.56%. Electrolyte: 107,000 tons, a month-on-month increase of +8%. Investment advice: According to the classification of new technology, new scenarios, and traditional core sectors, inventory the 20 sub-segments of the lithium battery industry's prosperity raceway, and at the current time, focus on the following main lines: 1) Construction of semi-solid-state battery production line/full solid-state battery pilot line, core equipment and material pinpointing; 2) New technologies for solid-state batteries, such as lithium metal anodes, dry electrodes, lithium sulfide, etc.; 3) Sub-segments with expected price increases, such as lithium hexafluorophosphate, energy storage batteries, separators, anodes, etc.; 4) Explosive demand in data centers, core suppliers of energy storage, BBU, and UPS batteries; 5) Sodium-ion batteries scaling up in energy storage and electric two-wheelers scenarios, pinpointing batteries and materials. Lithium metal: Surge in energy storage demand may present a turnaround opportunity for the industry Short-term: The current lithium market is running at a high level of supply, with demand showing a stronger performance, synchronous growth in new energy vehicles and energy storage fields driving material demand. Upstream inventories have fallen to low levels, leading to a destocking pattern in the market. With low inventories and strong demand support, lithium carbonate prices are expected to remain relatively strong in the short term. Medium to long term: Domestic independent energy storage + overseas AI energy storage demand continues to grow rapidly, with monthly demand remaining above 120,000 tons. Monthly destocking will reach 8-10 thousand tons, providing continuous support for prices. The 2026 outlook for energy storage demand has been revised upward, with the industry's supply and demand situation improving, and the speed of monthly destocking is expected to accelerate. Supported by the expectation of strong demand growth, prices are likely to rise. (Note: This is a lengthy and detailed translation, if you need specific parts of the text translated or summarized, please let me know.)