Looking ahead to 2025, the domestic market is restarting expansion, and lithium battery equipment is facing new opportunities; policies are accelerating capacity elimination, and the supply and demand of Photovoltaic Equipment is expected to reverse at the bottom.
According to Zhijun Finance APP, Guolian has released a Research Report stating that due to automotive clients' requirements for consistency and safety of battery products, the update cycle for traditional liquid Battery equipment is typically around five years. The previous peak expansion period in the domestic market was from 2020 to 2021, and a small peak in the replacement of domestic lithium battery equipment is expected around 2026-2027. New technologies will drive additional equipment demand, such as composite Copper foil, 4680 large cylindrical cells, and Solid State Batteries. In 2024, the short-term outlook for the Photovoltaic Equipment Sector is at the bottom due to industry pressures from overcapacity. However, with policy support, a bottom reversal in the supply-demand pattern of the industry is expected in 2025, driving new technology capital expenditures.
Guolian Securities' main points are as follows:
Lithium Battery Equipment: Domestic expansion restarts, and equipment faces new opportunities.
Domestic expansion bottom reversal: In the first half of 2023-2024, there is an overcapacity of domestic lithium battery main chain, and battery manufacturers have a low willingness to expand in the short term. However, in Q3 2024, leading enterprises like Contemporary Amperex Technology and BYD will restart expansion, with a total of 25 new projects by battery companies both domestically and internationally, totaling an investment amount exceeding 99.1 billion yuan, planning battery production capacity of over 281 GWh.
Equipment update cycle of five years: Due to automotive clients' requirements for consistency and safety of battery products, the update cycle for traditional liquid Battery equipment is typically around five years. The previous peak expansion period in the domestic market was from 2020 to 2021, and a small peak in the replacement of domestic lithium battery equipment is expected around 2026-2027. New technologies will bring additional equipment demand: new technologies such as composite Copper foil, 4680 large cylindrical cells, and Solid State Batteries.
Photovoltaic Equipment: Policy accelerates capacity clearance, and supply-demand is expected to reverse at the bottom.
In 2024, the short-term prosperity of the Photovoltaic Equipment Sector is expected to bottom out, mainly due to industry pressure caused by overcapacity; with policy support, the industry supply and demand pattern is expected to experience a bottom reversal in 2025, driving capital expenditures for new technologies.
From various aspects, the new technology in the silicon wafer segment is low-oxygen monocrystalline furnaces + tungsten wire diamond wire. The monocrystalline furnace increases the superconducting magnetic field or ultra-large pump to solve the concentric circle & black-heart wafer issues of N-type silicon wafers, while the diamond wire further refines based on tungsten wire busbars to improve the silicon rod yield. The new technologies in the Solar Cells segment are HJT and BC, where HJT features a dual-sided symmetrical structure, and BC avoids gridline shading on the front, thereby improving light conversion efficiency. The new technology in the module segment includes 0BB and stacked grid reduction silver consumption technology, where 0BB is an upgrade of the SMBB technology, eliminating the main grid and retaining only the sub-grid; stacked grid can be understood as an even more extreme version of 0BB, completely replacing the "main grid + sub-grid" with "seed layer + conductive wire," further reducing silver paste consumption.
Investment Suggestion: Bullish on the order recovery of leading lithium battery equipment, pay attention to advancements in photovoltaic new technologies.
(1) Lithium Battery Equipment: This round of domestic lithium battery capacity expansion shows a clear trend towards concentration among leaders. Since leading battery manufacturers are bound to leading equipment manufacturers, these leading equipment players are expected to benefit first. It is recommended to focus on leaders with complete line supply capabilities, such as Wuxi Lead Intelligent Equipment (300450.SZ) and Zhejiang HangKe Technology Incorporated (688006.SH), which has a relatively high proportion of overseas customers. Additionally, it is advisable to pay attention to Hongtian Co., Ltd. (603800.SH), a pioneer in the composite copper foil industry benefiting from industrialization, Dongwei Technology (688700.SH), a complete line equipment manufacturer using a two-step method, and the leading ultrasonic rolling welding equipment manufacturer Jiao Cheng Ultrasonic (688392.SH); Wuxi United Winners Laser Co., Ltd. (688518.SH) benefits from breakthroughs in 4680 welding equipment; Hymson Laser Technology Group (688559.SH) and Liyuanheng (688499.SH) have complete line supply capabilities for Solid State Battery.
(2) Photovoltaic Equipment: Recommend leading equipment manufacturers with rich new technology reserves and 0BB such as Wuxi Autowell Technology Co., Ltd. (688516.SH), as well as slice outsourcing leaders Qingdao Gaoce Technology (688556.SH), whose profits rebound with silicon wafer prices. Focus on: ① New technologies for solar cells BC and HJT: Laplace (688726.SH), Shenzhen S.C New Energy Technology Corporation (300724.SZ), Suzhou Maxwell Technologies (300751.SZ); ② Module side: Stacked grid technology leader Shichuang Energy (688429.SH); ③ Silicon wafer side: Leading monocrystalline furnace Zhejiang Jingsheng Mechanical & Electrical (300316.SZ).
Risk Warning: Downstream demand may not meet expectations; risks of technological iteration; risks of policy changes.
