Citibank: The decline in the planned production of the battery industry in mainland China in January is not due to a decrease in actual demand. Our top pick is Contemporary Amperex Technology (03750).

Citibank released a research report stating that the planned production of the top five battery manufacturers in mainland China in January 2026 may decrease by 7% compared to the previous month, with Contemporary Amperex Technology (03750) possibly falling by 10%, a decline greater than the market's original expectation of a low single-digit decrease. The bank maintains a defensive view on the battery industry chain, as there are uncertainties in the planned production outlook due to seasonal factors and weak demand for electric vehicles. The industry's top choice is Contemporary Amperex Technology, with a target price of HKD 621 for H shares and RMB 571 for A shares of Contemporary Amperex Technology (300750.SZ). The bank believes that the weak planned production of batteries in January may be due to negotiations between leading battery companies and their upstream suppliers, rather than a substantial decline in demand. In addition, some major cathode material manufacturers have announced plans to shut down for maintenance in January due to rising raw material prices and thin processing fee income. The bank believes this is related to the sharp rise in lithium carbonate futures prices.