According to Securities Times APP, China International Capital Corporation released a research report stating that in October, the new energy vehicle industry chain entered a state of booming supply and demand, with the operating rate of top manufacturers in the battery and multiple material sectors saturated. Overall, battery prices are running smoothly, while material prices are fluctuating at low levels. With the high operating rate of head manufacturers, it is expected that some oversold sectors in the previous period, such as lithium iron phosphate cathodes and electrolyte hexafluoride, may see price support or even price increases. In terms of competitive landscape, benefiting from the strong demand in the Chinese market, Chinese battery manufacturers maintain a stable global supply status, while the market shares of top manufacturers in each sector remain stable.

China International Capital Corporation's main views are as follows:

Electric vehicles: The Chinese market remains highly prosperous, while the performance in the European and American markets is relatively flat.

In terms of sales volume, in October, the Chinese new energy vehicle market continued to be highly prosperous, with the year-on-year growth rate of sales of new energy passenger vehicles exceeding 50%, mainly due to government scrappage incentives and subsidies for trade-ins, as well as the notable increase in the proportion of plug-in hybrids. This trend may be driven by the hot sales of some extended-range vehicle models, leading to an upward trend in the export of new energy vehicles. In eight European countries, the sales of new energy passenger vehicles were flat year-on-year, while in the USA, the sales of new energy passenger vehicles increased by 17.8% year-on-year, possibly due to increased deliveries of Tesla Model Y and a lower base in the same period last year.

Midstream of new energy vehicles: In October, domestic power battery installation volume increased month-on-month, with a slight decrease in scheduling by December.

Looking at each segment: 1) Battery: In October, the domestic power battery installation volume continued to grow steadily with stable prices, but a slight decrease in scheduling by December; 2) Cathodes: In October, cathode production continued to increase, with prices slightly declining, and a small decrease in scheduling by December; 3) Anodes: Production continued to grow in October, with stable prices and steady scheduling by December; 4) Separators: A slight decrease in scheduling by December, with prices continuously falling; 5) Electrolyte: A slight decrease in scheduling by December, with prices remaining stable month-on-month; 6) Copper foil: A slight decrease in scheduling by December, while processing fees slightly increased month-on-month.

Charging stations: The global charging industry's construction of stations is slowing down, with the proportion of direct current stations steadily increasing.

Regarding station construction, in 10M24, the year-on-year growth rate of new charging stations in China slightly decreased, possibly due to macroeconomic pressure and delays in charging station construction projects. In 3Q24, the year-on-year increase in charging stations in Europe and the USA both decreased, with the former possibly due to the impact of a high-interest rate environment and a slowdown in electrification by some vehicle companies, and the latter possibly due to a relatively high base in the same period last year.

In terms of structure, currently, AC stations still dominate in China, the US, and Europe, but the proportion of DC stations is steadily increasing overall. In terms of charging utilization rates, the industry's average utilization rate in 10M24 was 8.1%, a decrease of 0.5ppt from the previous month. The decrease in utilization rate month-on-month may be due to the decrease in temperature in October, reduced electricity demand for air conditioning, and a month-on-month decrease in total charging volume.

Valuation and recommendations: Recommended varieties with price increase potential include lithium iron phosphate positive electrode materials, electrolyte hexafluoride, as well as batteries, negative electrodes, and comprehensive zero-emission component segments.

1) Batteries: Contemporary Amperex Technology (300750.SZ), EVE Energy Co., Ltd. (300014.SZ);

2) Negative electrodes: Hunan Zhongke Electric (300035.SZ), Shangtai Technology (001301.SZ), Shanghai Putailai New Energy Technology (603659.SH);

3) Comprehensive zero-emission components: ZhongRong Electric (301031.SZ), Hongfa Technology (600885.SH), Xidian New Energy (603312.SH).

Risk warning: Global sales of new energy vehicles fall below expectations, with upstream raw material price increases exceeding expectations.