Wisdom Financial APP learned that Bocom Intl. issued a research report stating that from the perspective of public offering fund holdings, in the third quarter of 2024, the public offering funds have increased their shareholding and allocation ratios in the lithium battery sector, and investment sentiment is gradually emerging from the trough. China has a well-established layout in the liquid battery industry chain, while the solid-state battery industry chain is generally upgrading on the basis of the existing battery industry chain. It is expected that China will also have a price advantage and maintain global leadership. In the short term, fast charging/rapid charging and hybrid/extended range are the focal deployment directions. Recently, Contemporary Amperex Technology released the Xiaoyao battery, achieving a pure electric range of over 400 kilometers. In the future, plug-in hybrid/extended range batteries will develop towards higher capacity, and the pure electric range will gradually increase to 500 kilometers. In the medium to long term, solid-state batteries are a revolutionary technology for the industry.

Bocom International's main points are as follows:

Valuation returning to a reasonable range + low-altitude economy catalysis, sector investment sentiment rebounding

The current Wande Lithium Battery Index TTM P/E ratio is 34 times, rebounded by nearly 40% from the September 2024 low, approaching the three-year historical average, and the industry valuation is gradually returning to a reasonable range. From the perspective of public offering fund holdings, in the third quarter of 2024, the public offering funds have increased their shareholding and allocation ratios in the lithium battery sector, and investment sentiment is gradually emerging from the trough. Since 2024, low-altitude economy policies and solid-state battery technology catalysis have frequently occurred, driving sector sentiment. In November alone, various battery companies including Contemporary Amperex Technology have presented new phased achievements, and even Huawei has begun to enter the field. Developing a low-altitude economy is a strategic requirement, and policy support will be continuous.

LFP technology advantages + supply chain advantages, Chinese battery companies are aiming at the global market

Bocom Intl. estimates that from 2024 to 2026, global battery demand will grow at a CAGR of 14%, and the demand remains strong. Compared to Japanese and Korean companies betting on ternary, China has also laid out the lithium iron phosphate (LFP) technology path, with significant cost advantages. It is expected that in the medium to short term, this advantage will still be maintained. In the long term, after the large-scale production of solid-state batteries, cost factors will also need to be considered. China has a well-established layout in the liquid battery industry chain, while the solid-state battery industry chain is generally upgrading on the basis of the existing battery industry chain. It is expected that China will also have a price advantage and maintain global leadership. The impact of the U.S. IRA Act and tariffs on Chinese products on storage batteries is greater than on power batteries. It is expected that more companies will build factories overseas, and changes in U.S. new energy policies and Chinese import tariff rates will be significant uncertainties in the near term.

Focus on opportunities for technological iterations, including hybrid batteries, solid state batteries, etc.

In the short term, fast charging/ultra-fast charging and hybrid/extended-range are key strategic directions. Since 2024, the sales proportion of hybrid/extended-range new energy vehicles has reached 42% (compared to 18% in 2021). Recently, Contemporary Amperex Technology released the XIAOYAO battery, achieving over 400 kilometers of pure electric range. In the future, plug-in hybrid/extended-range batteries will develop towards higher energy capacity, with pure electric range gradually increasing to 500 kilometers. In the medium to long term, solid-state batteries represent a revolutionary technology in the industry. Currently, there is still room for improvement in solid-state battery technology and the industry chain. It is widely believed that solid-state batteries will achieve commercial mass production by 2030. Within the industry chain, the transition of lithium battery technology to solid-state batteries will drive the upgrade of material systems, focusing on solid-state electrolytes, positive and negative electrodes, porous copper foil, and aluminum-plastic film.

The Matthew effect is evident, with a preference for industry leaders.

Technology is the core, but profitability is key in the short to medium term. The battery industry shows a clear Matthew effect, and with Ningde's scale effects and technological advantages, it is expected that its leading edge in profitability in the short term will be difficult to break. In the long term, considering Ningde's significant lead in research and development over other companies, it is expected to maintain a long-term competitive advantage. After considering factors such as valuation, scale, and progress in overseas business, Ningde Times (300750.SZ), EVE Energy Co.,Ltd. (300014.SZ), Gotion High-Tech (002074.SZ), China Crady New Energy (03931), and Rept Battero (00666) are recommended.