Tianfeng Securities·2025-07-31 15:33Investment Rating - The investment rating for the company is "Buy" with a target price of 29.00 CNY, indicating a potential upside of over 20% from the current price of 21.95 CNY [6]. Core Insights - The report highlights a recovery in capital expenditure in the lithium battery sector, with significant growth expected in battery demand driven by diverse sources, including power and energy storage applications. The global shipment of lithium batteries is projected to grow from 1766 GWh in 2025 to 5154 GWh by 2030, representing a compound annual growth rate (CAGR) of 24% [2]. - The company is positioned to benefit from the increasing adoption of high-strength steel in battery casing, particularly in heavy-duty electric vehicles, which is expected to enhance safety and reduce costs [3]. - The demand for small steel shell batteries in consumer electronics is anticipated to rise due to technological advancements and policy support, leading to an increase in both volume and price for laser welding processes [4]. Summary by Sections Historical Stock Price and Operational Review - The company's stock price has undergone significant fluctuations since its listing, experiencing a peak in December 2021 and a trough in February 2024, with a total decline of over 75% from peak to trough [14]. Current Operations: Diversified Performance and Potential Recovery - The company is expected to see a recovery in performance as it diversifies its operations, with a projected revenue of 36.4 billion CNY, 49.4 billion CNY, and 60.3 billion CNY for the years 2025 to 2027, respectively [4][5]. Lithium Battery Sector: Upward Capital Expenditure and Market Growth - Major lithium battery manufacturers have resumed expansion cycles, with capital expenditures reaching 28.7 billion CNY in Q4 2024, a year-on-year increase of 17%, and 20.6 billion CNY in Q1 2025, up 22% year-on-year [2]. Large Steel Shell Batteries: Enhanced Applications and Market Penetration - The report notes that the application of high-strength steel in battery casings is progressing faster than market expectations, particularly in heavy-duty electric vehicles, which could lead to increased demand for laser welding equipment [3]. Consumer Batteries: Demand and Technological Synergy - The report anticipates a synergistic effect from demand, technology, and policy driving the transition of mobile phone batteries towards higher energy density and replaceable designs, which will likely boost the market for small steel shell battery laser welding [4]. Profit Forecast and Valuation - The company is projected to achieve a net profit of 3.3 billion CNY, 4.5 billion CNY, and 5.7 billion CNY from 2025 to 2027, with a corresponding average PE ratio of 27 for comparable companies in 2026, leading to a target market capitalization range of 9 to 11.3 billion CNY [4][5].