Central China Securities: Energy Storage Battery Demand Exceeds Expectations, Maintains "Outperform" Rating on Lithium Battery Sector

Stock News11-20

Central China Securities has reiterated its "Outperform" investment rating on the lithium battery industry, highlighting four key investment themes:

1. **Industry Leaders Benefit from Policy Support**: As anti-overcapacity measures and supportive policies take effect, leading companies in specialized segments are expected to gain advantages. Investors should focus on top players in the supply chain.

2. **Strong Growth in Energy Storage Demand**: Energy storage battery demand is surging beyond expectations, benefiting battery manufacturers and upstream material suppliers—particularly those specializing in lithium iron phosphate (LFP).

3. **Price Increases in Supply Chain Segments**: Certain segments of the supply chain are experiencing rising prices, presenting investment opportunities.

4. **Solid-State Battery Advancements**: Progress in solid-state battery technology and commercialization, especially through major industry milestones and product launches, warrants close attention.

**Sector Performance Rebounds, Outpacing Market Indices** In 2024, the lithium battery sector reported modest revenue growth of 0.14% but a 30.70% decline in net profit. However, in the first three quarters of 2025, revenue rose 12.81% and net profit surged 28.38%, signaling a recovery. The lithium battery index has climbed 79.34% year-to-date, outperforming the CSI 300 by 63.25 percentage points.

**Robust Demand for Power and Energy Storage Batteries** From January to September 2025, global sales of new energy passenger vehicles reached 14.48 million units, up 23.47% year-on-year, while global power battery installations hit 811.8 GWh, growing 34.70%. China’s new energy vehicle sales rose 32.41% to 12.91 million units, driven by policy incentives, improved cost-performance ratios, and a shift toward product-driven demand.

China’s combined power and other battery production reached 1,292.5 GWh, up 51.30%, with double-digit growth expected in 2026. Energy storage battery shipments soared 62.62% to 430 GWh in the first three quarters, with full-year growth projected above 75%, fueled by overseas demand and declining costs.

**Sector Growth to Continue** China dominates the global lithium battery market, with six firms among the top 10 power battery manufacturers, holding a 68.2% market share. In energy storage, China’s share exceeds 90%. Supply chain prices remain stable or slightly rising, with cobalt-related products and electrolytes seeing short-term spikes, while lithium carbonate prices have bottomed out.

Central China Securities forecasts sustained double-digit earnings growth for the sector in 2026, though performance will vary across segments.

**Risk Factors**: - Slower-than-expected global or domestic economic growth - Underperformance in new energy vehicle sales - Weak policy implementation - Intensified industry competition - Volatility in segment prices - Supply chain disruptions

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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