China Securities Co., Ltd.: The surge of energy storage lock-up continues to be bullish on lithium batteries and energy storage.

China Securities Co., Ltd. released a research report stating that Beijing HyperStrong Technology (688411.SH) and Contemporary Amperex Technology (300750.SZ) signed a 3-year 200GWh large order last week, confirming the logic of energy storage battery shortage. The excess profits in the investment and operation of energy storage downstream will be transferred to materials, batteries, integration, etc. by raising prices in the midstream and upstream sectors as demand sharply increases. The lithium battery industry chain has great elasticity. Opportunities in materials, especially 6F, lithium iron phosphate, negative electrode, separator, and battery segments, are still favored. The following points will be monitored: 1) Material shortages and rising prices of energy storage batteries due to the peak production season. 2) With downstream purchasing and long-term order references in October/November, demand for 2026 becomes increasingly clear. 3) Changes in pricing models. Key points from China Securities Co., Ltd.: Energy Storage: Last week, Beijing HyperStrong Technology and Contemporary Amperex Technology signed a 3-year 200GWh large order, confirming the shortage of energy storage batteries. The excess profits in the investment and operation of energy storage downstream will be transferred to materials, batteries, integration, etc. by raising prices in the midstream and upstream sectors. There are opportunities for coordinated benefits in these sectors. Recommended materials include electrolytes, 6F, VC, cathodes, anodes, separators, copper foil, etc.; batteries; and key integration segments. Lithium Batteries: Last week, the demand in the industry chain exceeded expectations in Q1 production growth; with the overall rise in the electrolyte industry chain, the market began to react to the nonlinear growth that would occur after the economic viability of energy storage was established. The lithium battery industry chain has great elasticity. The following will be monitored: 1) Material shortages and rising prices of energy storage batteries due to the peak production season. 2) With downstream purchasing and long-term order references in October/November, the demand for 2026 becomes increasingly clear. 3) Changes in pricing models. Opportunities in materials, especially 6F, lithium iron phosphate, negative electrode, separator, and battery segments, are still favored. Solar Energy: Short-term silicon wafer prices may experience some loosening due to reduced demand at the end of the year and downstream destocking effects. However, silicon material costs have strong support for prices based on the "pricing law." Silicon material capacity integration is steadily progressing, with occasional setbacks but no change in direction. In addition to industry integration and self-discipline measures, energy consumption, environmental protection, and other aspects will also become core means of industry control. BC batteries are the preferred segment within the sector. If the anti-"internal circulation" progress goes smoothly, it may promote the profit recovery of leading silicon material and integrated enterprises. Electric Power Equipment: The high level of attention to power shortage in North America, the consensus on the shortage of transmission and transformation equipment, and the high increase in target market for exporting transformers to North America; short-term fluctuations due to funding volatility. AIDC support remains the industry's main focus, with continued catalysis. NVIDIA has explicitly indicated future trends in the SST industry, with a high level of attention on SST concepts related targets. The boom in overseas markets continues, with a 45%+ export growth of domestic power transformers in the first 8 months of 2025, focusing on opportunities in North America/Middle East. In the domestic high-voltage sector, benefiting from global transmission construction prosperity, attention is continuously increasing; the approval of the Pengxi UHV project brings about catalysis. Wind Power: Recently, wind turbine prices have remained stable, with strong certainty in performance improvement of the wind turbine segment in 2026. Most turbine manufacturers are optimistic about next year's shipments, with expectations of continued growth in 2026, even under the high base of 2025. Subsequent attention can be given to whether the performance of leading turbine companies in 2026 further exceeds expectations, with the current expectation of a net profit margin of 2-3% for land wind turbines next year; also, focus on components segment with potential for price increases (primarily in the blade casting segment). Hydrogen Energy: Global SOFC industrialization is accelerating, with North American bloom energy successfully applying its SOFC products to power centers, European Ceres power accelerating the commercialization of its products, Weichai obtaining its technology license and initiating domestic SOFC production capacity construction. Apart from North America, Europe, Southeast Asia, Japan, and South Korea are establishing the SOFC landscape, focusing on the value of the entire machine segment in the global industrialization of SOFC, followed by the core material segment. Siasun Robot & Automation: This week, the IPO listing consultation work of Siasun Technology has been completed, and the formal submission of the listing documents to the exchange will be scheduled. The sector has been experiencing continuous correction recently, and it will require a new round of catalysts or realization of industrial rhythms, such as early fulfillment of production contracts, for expectations of upward revisions. It is recommended to focus on 1) potential suppliers for the Optimus V3 dexterous hand segment; 2) domestic chain focus on leading producers such as ZYY and Siasun. Risk Warning: 1) Lower-than-expected production and sales of downstream new energy vehicles: Sales may be affected by lower-than-expected macroeconomic effects, while production may be impacted by significant fluctuations in upstream raw material prices, high electricity prices, etc., subsequently affecting the profitability and valuation of the industry chain. 2) Unexpected increase in raw material prices: Since 2021, raw material prices have been continuously rising, and there have been significant fluctuations in raw material prices. High and unstable prices will have a certain impact on terminal demand, significantly affecting the profitability of companies in the industry chain. 3) Policy support is below expectations: Some European countries currently provide corresponding subsidies for the purchase of new energy vehicles. If future policy support is reduced, it may lead to lower-than-expected demand release.