A research report from Bank of Communications International indicates that while China's power battery installations declined in February due to a seasonal slowdown in the auto market, exports maintained strong momentum. Installations of power batteries in mainland China reached 26.3 GWh in February, representing a year-on-year increase of 24.6% but a month-on-month decrease of 37.4%. During the same month, China's battery exports totaled 23.9 GWh, rising 13.2% year-on-year while dipping 0.9% compared to the previous month. Combined exports accounted for 20.6% of total sales for the month. The report points out that on the demand side, short-term needs are being strongly supported by the full implementation of automobile "trade-in" subsidy programs across various regions following the Lunar New Year holiday, the intensive launch of new vehicle models between April and May, and a temporary "rush to export" effect spurred by adjustments to battery export tax rebate policies. At the same time, geopolitical tensions in the Middle East are expected to further boost overseas demand for energy storage, while Chinese manufacturers continue to expand their global market share by leveraging the cost advantages of the lithium iron phosphate (LFP) technology route. The institution maintains its positive outlook for full-year lithium battery demand in China. Regarding individual stocks, it is recommended to focus on industry leader CATL (03750), which possesses cost advantages, technological barriers, and a leading presence in overseas markets.
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