The Zhitong Finance App learned that Zhongyuan Securities released a research report saying that the rise in the NEV boom is driving improvements in the performance of the lithium battery sector and maintaining the industry's “better than the market” investment rating. Global and Chinese NEV sales continue to grow, and the driving force for the development of China's NEV industry is shifting to product-driven; looking ahead to 2025, demand for lithium batteries will continue to grow, focusing on demand in the power and energy storage sector; combined with the release of production capacity and the growth rate of downstream demand, the overall price of the industry chain will fluctuate mainly. Overall industry profits are still not optimistic, and differentiation will continue. It is recommended to focus on four main lines.

The main views of Zhongyuan Securities are as follows:

The performance of the lithium battery sector is under pressure in the short term, and the trend is weaker than the Shanghai and Shenzhen 300 Index.

In 2023, the revenue and net profit of the lithium battery sector increased by 6.65% and -33.61% respectively; the first three quarters of 2024 declined by 5.21% and 26.56%, respectively. Both revenue growth and net profit growth were negative, and the segments were significantly divided. Since 2024, the lithium battery index has risen 7.67%, outperforming the Shanghai and Shenzhen 300 Index by 8.90 percentage points.

Global and Chinese NEV sales continue to grow, and China is expected to grow by more than 20% in 2025.

From January to September 2024, the world sold 11.7266 million new energy passenger vehicles, an increase of 24.05% over the previous year. Among them, BYD ranked first in the world. From January to January 2024, China sold 9.751 million new energy vehicles, an increase of 34.85% over the previous year. It is mainly due to changes in supply and demand, continuous policy encouragement, and the transformation of the development driving force of China's NEV industry to be product-driven.

China's macroeconomic policy continues to encourage the development of new energy vehicles, and the charging infrastructure is improving steadily. It is estimated that in 2024, China will sell about 12.6 million vehicles, an increase of 33.36% over the previous year; in 2025, about 15.4 million vehicles, accounting for about 50%.

The sector's performance will resume growth.

The growth of lithium batteries mainly focuses on power and energy storage. Lithium battery shipments are expected to continue to grow. From January to September 2024, the global power battery installed capacity was 599.0 GWh, up 23.40% year on year, and the share of China's power battery companies in the top 10 increased to 68.05%; from January to October 2024, China's power and other battery production was 847.50 GWh, an increase of 38.30% year on year.

Looking ahead to 2025, demand for lithium batteries will continue to grow, focusing on demand in the power and energy storage sector; combined with the release of production capacity and the growth rate of downstream demand, prices in the industrial chain will generally fluctuate; overall industry profits are still not optimistic, and differentiation will continue. Overall, it is expected that sector performance will be under pressure in 2024, and sector performance will resume growth in 2025, but differentiation will intensify.

Industry ratings and main investment lines.

Maintain the industry's “stronger than the market” investment rating based on industry policies, industry development prospects, performance growth expectations and valuation levels. Based on the competitive characteristics of China's lithium battery industry, the price trend of the industrial chain, and the characteristics of segmented fields and industry development trends, it is recommended to focus on the main investment lines, including:

First, the industrial chain, especially the price of upstream raw materials, is under overall pressure. Downstream lithium battery companies will benefit relatively, focusing on enterprises with technological and scale advantages;

Second, the share of lithium iron phosphate installed equipment continues to increase, and companies with technical advantages in the lithium iron phosphate segment will win;

Third, enterprises with competitive market share growth advantages in key lithium battery material segments, focusing on targets with cost advantages;

Fourth, investment opportunities in the theme of solid-state batteries exceeding expectations and sales of new car builders exceeding expectations.

Risk warning: The macroeconomic decline at home and abroad exceeded expectations; sales of new energy vehicles fell short of expectations; implementation of industry policies fell short of expectations; industry competition intensified; prices in the segment fluctuated greatly; and the global industrial chain supply chain was uncertain.