According to Zhitong Finance APP, Fangzheng Securities released a research report stating that as the battery industry restarts capital expenditure expansion, equipment manufacturers will benefit first. From an overall trend perspective, production scheduling plans for china shipbuilding industry group power enterprises are not declining but rather increasing, showing strong expansion momentum; from the demand side, the domestic installation volume has increased significantly year-on-year, and the penetration rate of electric vehicles in major countries is steadily increasing. In addition, the technological iteration and industrial upgrading trend of the lithium battery industry are evident, and related materials manufacturers are expected to benefit.

The main points of Zheng Securities are as follows:

With leading companies at the forefront, lithium battery manufacturers are expected to restart expansion.

According to Gaishi Auto, in Q3 2024, china shipbuilding industry group power companies have invested in and constructed 25 new projects both domestically and internationally, with a total investment exceeding 99.1 billion yuan, and the newly added lithium battery production capacity is expected to reach 281 GWh. Looking further, leading enterprises such as contemporary amperex technology and BYD are accelerating their capacity expansion.

In July 2024, a joint venture company named "Times Changan," funded jointly by contemporary amperex technology, chongqing changan automobile and its subsidiary deep blue automobile, plans to invest 5 billion yuan to establish a 25 GWh lithium battery production base in the Chuanju Gaozhu New District.

In July of this year, BYD announced the completion of the signing of the phase three project of the Shen-Shan BYD automobile industrial park with the Shenzhen-Shanwei Special Cooperation Zone, with an expected investment of 6.5 billion yuan, aimed at building a battery pack production line and a factory for core components of new energy vehicles. From an overall trend perspective, production scheduling plans for china shipbuilding industry group power enterprises are not declining but rather increasing, showing strong expansion momentum.

In Q3 2024, contemporary amperex technology saw a significant increase in inventory, with capacity utilization potentially continuing to rise.

Regarding inventory, in Q3 2024, contemporary amperex technology's inventory reached 55.215 billion yuan, an increase of 12.95% year-on-year. The company's higher inventory level may reflect its proactive stocking strategy, aimed at fully preparing for the upcoming Q4 sales peak. In terms of capacity utilization, in H1 2024, contemporary amperex technology had a battery system capacity of 323 GWh and 153 GWh under construction, with a capacity utilization rate of 65.33%, a 4.83 percentage points increase compared to H1 2023.

During Q3 2024, the company's battery system shipments were approximately 125 GWh, reflecting a quarter-on-quarter growth of about 15%. According to company executives, the capacity utilization rate for Q3 2024 is close to saturation, and it is expected to be even fuller in Q4 2024. Overall, the significant increase in inventory and the rising capacity utilization rate may indicate an improving downstream demand, likely transmitting to other enterprises.

On the demand side: domestic installed capacity saw a high increase year-on-year, with the penetration rate of new energy vehicles in major countries steadily rising.

According to CABIA, from January to October 2024, the cumulative installed capacity of power batteries in china reached 405.8 GWh, a year-on-year increase of 37.6%. Among these, the cumulative installed capacity of ternary/lithium iron phosphate batteries was 111.1/294.5 GWh, increasing by 18.3%/46.7% year-on-year.

On the international front, according to Markline statistics, from January to September 2024, the cumulative sales of new energy vehicles in 15 major automobile sales countries (accounting for about 90% of global new energy vehicle sales) reached 10.105 million units (22.4% of total automobile sales), marking a year-on-year growth of 23.2%. Thanks to subsidies for trade-ins and scrapping policies boosting consumer demand, along with the continuous development of global new energy vehicles, it is expected that china's new energy vehicle sales and exports will continue to rise.

Investment advice:

Key equipment manufacturers to focus on: wuxi lead intelligent equipment (300450.SZ), naconol (832522.BJ), shenzhen united winners laser co., ltd (688518.SH), hymson laser technology group (688559.SH), shanghai sk automation technology (688155.SH), jiaocheng ultrasound (688392.SH), fujian nebula electronics.,ltd (300648.SZ), and liyuan heng (688499.SH).

Key material manufacturers to pay attention to: contemporary amperex technology (300750.SZ), guangdong jiayuan technology (688388.SH), shenzhen kedali industry (002850.SZ), guangzhou tinci materials technology (002709.SZ), hunan yuneng (301358.SZ), xiamen tungsten new energy (688778.SH), and xidian new energy (603312.SH), etc.

Risk warning: Policy not meeting expectations; intensified industry competition; decline in electric vehicles sales.