Soochow Securities reports that the demand in the lithium battery industry exceeds expectations, with the off-season in November and December not being so dull. The demand for 2025 is revised upwards to more than 30% growth. Current valuations are at the profit bottom, leading players have outstanding technological innovation and cost advantages, profitability is recovering first, and a supply-demand reversal is imminent. Strongly bullish.
According to the Zhito Finance APP, Soochow Securities released a research report stating that the demand in the lithium battery industry exceeds expectations, with the off-season in November and December not being so dull. The demand for 2025 is revised upwards to more than 30% growth. Current valuations are at the profit bottom, leading players have outstanding technological innovation and cost advantages, profitability is recovering first, and a supply-demand reversal is imminent. The first recommendation is the stable leading battery companies: contemporary amperex technology (300750.SZ), BYD (002594.SZ), eve energy co.,ltd. (300014.SZ), and structural components: shenzhen kedali industry (002850.SZ).
Also bullish on material leaders with profit elasticity. The first recommendations are: hunan yuneng (301358.SZ), shangtai technology (001301.SZ), guangzhou tinci materials technology (002709.SZ), and the second recommendations are: shanghai putailai new energy technology (603659.SH), shenzhen capchem technology (300037.SZ), jiangsu cnano technology co.,ltd. (688116.SH), ningbo ronbay new energy technology (688005.SH), zhejiang huayou cobalt (603799.SH), cngr advanced material (300919.SZ), yunnan energy new material (002812.SZ), shenzhen senior technology material (300568.SZ), shenzhen dynanonic (300769.SZ), and others. Focus also on fulin precision (300432.SZ), jiangsu lopal tech. (603906.SH), hunan zhongke electric (300035.SZ), etc.; at the same time, lithium carbonate prices have bottomed, bullish on resource-rich leaders, recommending: sinomine resource group (002738.SZ), yongxing special materials technology (002756.SZ), ganfenglithium (002460.SZ), etc.
In 2025, the domestic electrification rate continues to rise, and in 2026, a turning point for new overseas models is expected, with global electric vehicle sales revised upwards to a growth of 22%.
In Q4 2024, domestic sales exceeded expectations, with the annual sales forecast raised by 1 million units to about 13 million units, a 37% growth. In 2025, domestic auto consumption policies are expected to continue, while the electrification rate of models priced at 0.1-0.2 million accelerates. Soochow Securities estimates that sales can maintain 25% growth to about 16.28 million units. In Europe and the United States, the sales forecast for 2025 is stable, but the new car cycle in the second half of 2025 is beginning, with expectations to continue domestic growth in 2026. Among them, Europe's sales for 2024 is expected to remain flat around 2.89 million units, recovering to 15% growth in 2025, and expected to accelerate to 30% growth in 2026. Therefore, globally, it is estimated that there will be 17.01 million electric vehicle sales in 2024, increasing by 27%, with an expected sales of 20.83 million units in 2025, increasing by 22%, and still maintaining an 18% growth in 2026.
With energy storage support, the demand for lithium batteries in 2025 is revised upwards to more than 30% growth, and the demand for replenishment in Q1 is expected to catalyze further upwards revisions.
Soochow Securities expects that the demand for dynamic storage batteries in 2024 will be about 1409GWh, a year-on-year increase of 30%, among which energy storage is 330GWh, a year-on-year increase of 57%. The pure electric ratio is expected to stabilize in 2025, with a stable increase in the energy capacity per vehicle, and it is expected that the demand for power batteries will be about 1351GWh, a 25% growth, while overseas large storage is continuously erupting, with an expected growth of energy storage batteries of 45% to 500GWh, making the total global dynamic storage demand 1851GWh, a year-on-year increase of 31%. At the same time, the industry chain is not dull in Q1 during the off-season, and the replenishment demand is obvious, leading to further potential upward revisions for lithium batteries throughout the year.
The low point of the industry chain has passed, and a price reversal is expected, with the price increase cycle likely to continue until the second half of 2025, until leading manufacturers restore reasonable profits.
Supply expansion is slowing down, demand is recovering, and capacity utilization has clearly improved. The lithium battery association will join enterprises to strengthen self-discipline, with a clear upward trend in low stock price order prices. Price elasticity is seen as iron lithium cathode > hexafluorophosphate > copper foil > anode > lithium carbonate > separator. Prices are expected to rise slightly in the fourth quarter of 2024, while profitability for second and third tier manufacturers in the industry remains weak, accelerating clearance. The supply-demand turning point is expected to be confirmed in the second half of 2025, with prices continuously moving upwards, and leading manufacturers able to restore reasonable profitability. At the same time, new products from leading manufacturers are increasing, and overseas layout is gradually showing results, starting from 2025 to 2026 with simultaneous volume and profit growth, opening up growth space.
