Central China: Energy storage battery demand exceeds expectations, maintaining a "stronger than market" investment rating for the lithium battery industry.

Central China released a research report stating that it maintains a "stronger than the market" investment rating for the lithium battery industry. It suggests focusing on four investment themes: First, with the progress of anti-inner loops and the continuous implementation of a series of policies, it is overall beneficial to industry leaders in segmented areas. Actively focus on leading companies in segmented areas of the industry chain. Second, demand for energy storage batteries will experience high growth. Focus on batteries and upstream materials companies benefiting from the growth in energy storage demand, especially companies with advantages in the lithium iron phosphate segmented area. Third, pay attention to segmented areas where prices in the industry chain are rising. Fourth, pay attention to the progress and implementation of solid-state battery technology, especially industry milestone events and new product launches. Key points from Central China include: Sector performance is recovering and trending significantly stronger than the Shanghai and Shenzhen 300 Index. In 2024, the revenue and net profit of the lithium battery sector increased by 0.14% and -30.70% respectively. In the first three quarters of 2025, they increased by 12.81% and 28.38% respectively, with double-digit growth in both revenue and net profit, but significant differentiation in segmented areas. Since 2025, the lithium battery index has risen by 79.34%, outperforming the Shanghai and Shenzhen 300 index by 63.25 percentage points. Continuous growth in power batteries with energy storage battery demand exceeding expectations. From January to September 2025, global new energy passenger car sales were 14.4786 million units, an increase of 23.47% year-on-year; global installed power was 811.8GWh, an increase of 34.70% year-on-year. In October 2025, our Shanxi Guoxin Energy Corporation sold 12.911 million vehicles, an increase of 32.41% year-on-year, mainly due to policy support, improved cost-effectiveness of new energy vehicles, and the transition from policy-driven to product-driven development in the automotive industry; China's power batteries and other batteries combined production reached 1,292.5GWh, an increase of 51.30% year-on-year, and it is expected to maintain double-digit growth in 2026. In the first three quarters of 2025, China's cumulative shipments of energy storage batteries reached 430GWh, an increase of 62.62% year-on-year, with a predicted annual growth rate exceeding 75%. The high growth in overseas energy storage demand is mainly due to the continuous cost reduction of energy storage batteries and policy incentives. Sector performance will continue to grow. China has a significant global competitive advantage in lithium batteries, with 6 Chinese companies among the top 10 global companies in the power battery market holding a 68.2% market share, and over 90% in energy storage. Prices in the industry chain are generally stable with some increases, particularly in cobalt-related products and electrolyte segmented areas where prices have rapidly risen in the short term, while prices of lithium carbonate and other products have already bottomed out. Overall, the average price of major materials in the lithium battery industry is expected to remain stable with some increase in 2026 compared to 2025. Combining industry demand, sector performance will recover in 2025 and is expected to maintain double-digit growth in 2026, but performance of individual stocks in segmented areas will differ. Risk warnings: Excessive macroeconomic downturn at home and abroad; sales of new energy vehicles falling below expectations; industry policy execution falling short of expectations; intensifying industry competition; significant price fluctuations in segmented areas; global supply chain uncertainties.