Core Viewpoint - The report from Bank of America Securities indicates a positive outlook for the energy storage industry, driven by domestic policy support and growth in overseas markets, particularly in the context of the recent World Energy Storage Conference held in Ningde, Fujian Province, China [1] Industry Summary - From 2025 to 2030, demand for energy storage batteries is expected to remain robust, with industry experts predicting that China's cumulative installed capacity for battery storage will reach 240 GW by 2030 [1] - Global energy storage demand is projected to be approximately 500 GWh in 2025, with growth rates of about 30% and 25% anticipated for 2026 and 2027, respectively [1] - The energy storage demand in Europe and emerging markets is also expected to remain strong over the next two to three years [1] Company Summary - Bank of America has raised its sales and profit forecasts for CATL (Contemporary Amperex Technology Co., Limited) by 3%, 4%, and 3% for the years 2025 to 2027, respectively, and has adjusted its battery shipment forecasts upward by 3%, 3%, and 2% for the same period [1] - The target price for CATL has been increased from HKD 475 to HKD 570, maintaining a "Buy" rating [1] - Additionally, the target price for China Innovation Aviation has been raised from HKD 24 to HKD 35, also with a "Buy" rating [1]

Group 1 - The demand for energy storage has surged, leading to tight supply of upstream energy storage cells, with major companies reporting full production capacity [1] - According to a report by CITIC Securities, the booming orders in the energy storage industry are driven by strong overseas demand, price recovery, and new energy storage initiatives [1][2] - In August, China's energy storage companies received global orders totaling 97.8 GWh, with overseas orders accounting for 15.2 GWh [1] Group 2 - The tight supply of energy storage batteries has resulted in rising product prices, benefiting companies with integrated supply chain advantages [2] - The introduction of the "136 Document" by the National Development and Reform Commission and the National Energy Administration aims to promote market-oriented pricing for renewable energy projects [2] - The new regulations present both opportunities and challenges for renewable energy companies, as they shift from fixed income to market-based revenue [2][4] Group 3 - Recent guidelines from various provinces clarify expectations for existing and new renewable energy projects regarding mechanism electricity and pricing [3] - Energy storage projects are expected to play a more significant role in the future power generation system, transitioning from cost centers to profit centers [4] - Jinko Power Technology Co., a leading solar power and energy storage operator, is accelerating its energy storage business in response to new regulations [4]

Core Viewpoint - The Chinese government has launched a new action plan to promote the high-quality development of new energy storage, aiming for a significant increase in installed capacity and technological advancement by 2027 [1][2]. Industry Overview - By mid-2025, China's cumulative installed power storage capacity reached 164.3 GW, a 59% year-on-year increase, while new energy storage capacity reached 101.3 GW, a 110% increase, marking a 32-fold increase since the end of the 13th Five-Year Plan [2]. - Continuous policy support and local initiatives are driving the growth of the energy storage sector, with various measures being implemented to enhance the integration of energy storage in different applications [2][3]. Technological Advancements - The industry is transitioning from a strong reliance on mandatory storage to a dual-driven model of technology and market forces, with significant breakthroughs in compressed air storage and sodium-ion battery projects [3]. - Innovations in commercial models are expected to be a key driver for future growth, particularly through deep integration with renewable energy sources like wind and solar [3]. Opportunities for Companies - Companies in the upstream supply chain, particularly those producing core components like cathode materials, are expected to benefit significantly from the policy and market advantages [4]. - The demand for lithium iron phosphate cathode materials has surged, with companies like Hunan YN Energy and Hubei Wanrun reporting substantial increases in sales [5]. - Major players like CATL have seen a significant rise in sales, with a reported 30% year-on-year increase in total sales, highlighting the growing demand for energy storage solutions [6]. Market Dynamics - The energy storage industry is entering a phase characterized by overlapping policy and market benefits, with a focus on enhancing research and development to overcome key technological challenges [6][7]. - The integration of energy storage solutions across various sectors, including data centers and industrial applications, is becoming increasingly prevalent, indicating a trend towards diversified applications [3].

Market Overview - A-shares continued to rise on September 15, with the ChiNext Index surging nearly 3%, breaking through 3100 points, marking a 3.5-year high [1] - The Shenzhen Component Index and CSI 300 also reached multi-year highs, although the number of declining stocks significantly outnumbered advancing ones [1] Sector Performance - Battery, automotive parts, photovoltaic equipment, and gaming sectors saw the largest gains, while real estate, broadcasting, components, and aerospace equipment sectors experienced declines [1] - The battery sector index rose over 9%, reaching a 3-year high, with leading company CATL's A-shares increasing by over 14% and H-shares by over 10%, both hitting historical highs [2] Key Stocks - Notable gainers included Zhongyi Technology (+20%), Tianhong Lithium (+18.31%), and CATL (+9.85%), with significant net inflows into these stocks [3] - Other companies like Hunan Youneng and Baili Technology also saw gains exceeding 10% [3] Solid-State Battery Developments - The commercialization of solid-state batteries is accelerating, with several companies announcing progress in their projects, including EVE Lithium's new production base and Ganfeng Lithium's successful R&D updates [4] - Guoxuan High-Tech reported a 90% yield rate on its first solid-state pilot line [4] Energy Storage Sector - The National Development and Reform Commission and the National Energy Administration announced a plan to increase new energy storage capacity from approximately 95 GW to over 180 GW by 2027, representing a nearly 90% increase [5] - The China Energy Storage Industry Technology Alliance reported a 5.4% year-on-year increase in energy storage bidding projects [5] Forecasts and Trends - CITIC Securities raised its domestic energy storage installation forecasts for 2025-2027 to 130 GWh, 165 GWh, and 190 GWh, respectively [6] - The lithium battery industry is expected to maintain upward momentum, with a focus on raw material prices and solid-state battery advancements [6] Automotive Industry Insights - The automotive supply chain saw a collective surge, with parts leading the gains and the sector index reaching a 10-year high [7] - The Ministry of Industry and Information Technology and other departments released a plan aiming for 32.3 million vehicle sales in 2025, with a target of 15.5 million for new energy vehicles, reflecting a 20% year-on-year growth [9] - The automotive market is characterized by accelerated electrification and the rise of domestic brands, with a shift towards intelligent technology in the industry [9]

Market Overview - A-shares continued to rise on September 15, with the ChiNext Index surging nearly 3%, breaking through 3100 points, marking a 3.5-year high [1] - Major indices such as the Shenzhen Component Index and CSI 300 also reached multi-year highs, although the number of declining stocks significantly outnumbered advancing ones [1] Sector Performance - Battery, automotive parts, photovoltaic equipment, and gaming sectors led the gains, while real estate, broadcasting, components, and aerospace equipment sectors saw the largest declines [2] Battery Sector - The battery concept stocks experienced a significant surge, with the sector index rising over 9% and reaching a 3-year high [3] - Leading company CATL saw its A-shares rise over 14% at one point, while its H-shares increased by over 10%, both hitting historical highs [3] - Other companies like Zhongyi Technology, Tianhong Lithium Battery, and Tianci Materials also saw their stocks hit the daily limit or rise over 10% [3] Solid-State Battery Developments - Sub-sectors such as energy metals, battery recycling, lithium mining, and solid-state batteries also showed strong performance [4] - Companies like EVE Energy and Ganfeng Lithium reported significant progress in solid-state battery projects, with EVE's production base officially launched [4] - Guoxuan High-Tech announced that its first solid-state pilot line has achieved a 90% yield rate [4] Energy Storage Sector - The National Development and Reform Commission and the National Energy Administration released a plan to increase new energy storage capacity from approximately 95 GW to over 180 GW by 2027, representing a nearly 90% growth [5] - The China Energy Storage Industry Technology Alliance reported a 5.4% year-on-year increase in energy storage bidding projects [5] Automotive Sector - The automotive industry saw a collective rise, with automotive parts leading the charge, reaching a 10-year high [7] - The Ministry of Industry and Information Technology and other departments issued a plan aiming for 32.3 million vehicle sales in 2025, a 3% increase year-on-year, with new energy vehicle sales projected to reach 15.5 million, a 20% increase [7][8] - The plan includes 15 initiatives to boost the automotive market, focusing on expanding domestic consumption and enhancing supply quality [8] Investment Insights - CITIC Securities raised its domestic energy storage installation forecasts for 2025-2027 to 130 GWh, 165 GWh, and 190 GWh respectively [6] - Zhongyuan Securities noted the overall upward trend in the lithium battery industry, emphasizing the importance of monitoring raw material prices and solid-state battery advancements [6]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **energy storage industry** in China and its performance in various regions, including **domestic and international markets** [1][5][11]. Core Insights and Arguments - **Profitability of Domestic Energy Storage Projects**: - In Shanxi, energy storage projects can achieve a return rate of **15%-20%**, with some projects reaching an investment return rate of **20%** due to high frequency modulation income [2][3]. - In Ningxia, project returns are estimated at **10%-12%**, while Inner Mongolia projects can exceed a **50% capital return rate** due to favorable pricing mechanisms [2][3]. - **Projected Growth in Energy Storage Capacity**: - By **2025**, China's large-scale energy storage capacity is expected to reach at least **150 GWh**, representing a **50% year-on-year increase** [5][6]. - The industry is anticipated to grow at a rate of **15%-20% annually** over the next three years, although a potential correction phase may occur in the mid-2030s [6]. - **Price Variability of Energy Storage Systems**: - Prices for energy storage systems vary significantly based on equipment quality, usage requirements, and project scale. For instance, in Inner Mongolia, self-use equipment prices exceed **0.65 RMB/kWh**, while competitive bidding prices can drop to **0.39 RMB/kWh** [1][8][9]. - **Differentiation in Profitability Among Integrators**: - Profitability among different energy storage system integrators varies significantly, influenced by supply chain capabilities, project types, and partnerships. For example, Haibo Company enjoys higher gross margins due to strong supply chain management and relationships with state-owned enterprises [10]. Additional Important Insights - **International Market Trends**: - The U.S. is projected to install over **50 GWh** of energy storage in **2025**, but this is expected to decline to around **40 GWh** in **2026** [11]. - The European market is expected to grow from **8-9 GWh** in **2024** to **15-17 GWh** in **2025**, with Eastern European countries being significant growth areas [14]. - **Challenges in the Middle East Market**: - The Middle East market is characterized by a lack of brand premium, focusing more on price competitiveness. For example, a 4-hour battery system in the region is priced at **73 USD/kWh** [22][23]. - **Regional Competitive Advantages**: - In the U.S., local production is crucial, while in Europe, long-term customer relationships are key. In the Middle East, a combination of brand recognition and competitive pricing is essential for success [25]. - **Quality and Yield Variability**: - There is significant variability in yield rates among companies in the energy storage sector, with higher yields indicating better production efficiency and cost management [30]. This summary encapsulates the essential insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the energy storage industry.

Core Viewpoint - The energy storage industry is experiencing a surge in demand, leading to significant stock price increases for several energy storage companies, reflecting a global explosion in storage demand and market reshuffling [1][3]. Group 1: Company Performance - Major energy storage companies have reported impressive financial results for the first half of 2025, indicating an initial phase of industry reshuffling [3]. - Notable revenue growth was observed in several companies, with Sunshine Power (阳光电源) achieving a 127.78% increase in energy storage revenue, while DeYa Co. (德亚股份) saw an 85.80% rise in its energy storage battery revenue [5]. - CATL (宁德时代) maintained its position as the global leader in energy storage battery shipments, with a total of 55 GWh shipped in the first half of 2025 [6]. Group 2: Market Dynamics - The global energy storage battery shipment volume reached 246.4 GWh in the first half of 2025, marking a 115.2% year-on-year increase, significantly surpassing domestic new energy storage installations [9]. - The energy storage market is projected to grow at a compound annual growth rate (CAGR) of 70%, with the battery energy storage system (BESS) market share expected to rise from 5% five years ago to 25% by 2024 [9][10]. - The demand for energy storage is driven by policy and market mechanisms, transitioning from a passive role to a market-driven phase, enhancing profitability and certainty [10]. Group 3: Production and Supply Chain - The production capacity utilization rates for major companies have significantly improved, with CATL reaching 89.86% and EVE Energy (亿纬锂能) at 80% in Q2 2025, compared to less than 35% a year prior [7]. - There is a notable backlog in orders for energy storage cells, with some orders extending into 2026, indicating a strong demand-supply imbalance [7]. - Prices for energy storage cells have been rising, with mainstream models experiencing a cumulative increase of 10%-20% from June to July 2025, supported by a rebound in lithium carbonate prices [7]. Group 4: Global Expansion - Chinese energy storage companies signed 199 new overseas orders in the first half of 2025, with a total scale exceeding 160 GWh, reflecting a 220.3% year-on-year growth [11]. - The global energy storage market is expected to maintain an annual growth rate of around 30% over the next three years, driven by increasing demand in regions such as Europe, the Middle East, and Southeast Asia [11].

Market Overview - On September 3, A-shares saw all three major indices decline, with the Shanghai Composite Index dropping by 1.16%, the Shenzhen Component Index down by 0.65%, and the ChiNext Index increasing by 0.95% [1] - The total trading volume in the Shanghai and Shenzhen markets was 23,641 billion RMB, significantly lower than the previous trading day [2] Index Performance - The ChiNext 50 Index rose by 1.55% and has increased by 40.43% year-to-date [2] - The ChiNext Index increased by 0.95% with a year-to-date rise of 35.38% [2] - The Hong Kong Hang Seng Index fell by 0.60%, while the Hang Seng China Enterprises Index decreased by 0.70% [4] Sector Performance - The top-performing sectors included Comprehensive (1.64%), Communication (1.61%), and Electrical Equipment (1.44%) [5] - The sectors with the largest declines were Defense and Military Industry (-5.83%), Non-Bank Financials (-3.05%), and Computers (-2.71%) [5] New Energy Sector Insights - The energy storage sector showed strong performance, driven by sustained domestic and international demand exceeding expectations, leading to upward adjustments in the supply chain [5][7] - Major battery manufacturers are projecting a 30-50% increase in shipments by 2026, surpassing the market's expected growth of over 20% [5] - The domestic energy storage market saw a significant increase in bids, with a total of 202 GWh awarded from January to July 2025, a year-on-year increase of 146% [7] Hong Kong Pharmaceutical Sector Updates - Xinqi Eye Medicine reported a 97.75% year-on-year increase in net profit for the first half of 2025, with ongoing innovation in drug development [8] - The Hong Kong pharmaceutical sector is expected to benefit from improved liquidity and potentially higher valuations compared to A-shares [8]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In the first half of 2025, China's new energy storage installations reached 21.9GW/55.2GWh, with a capacity scale up 76.6% year-on-year. The full - year new installation is expected to reach 110.8GWh, a slight 3% increase year - on - year. However, the demand front - loading phenomenon is obvious, and the second - half installation may decline year - on - year [1]. - The US energy storage market is booming, with an expected annual new installation of 15.8GW/49.8GWh, a 34% increase year - on - year. In Europe, large - scale energy storage is on the rise while household energy storage remains weak. Emerging countries have slow commissioning speeds but high planned scales [2]. - In June 2025, energy storage battery exports rebounded, while inverter exports decreased. The domestic energy storage system bid price rebounded slightly, and overseas prices remained stable [3]. - From June to July, energy - storage - related policies were intensively introduced, focusing on power market mechanisms and energy storage subsidies, which is conducive to accelerating the marketization of independent energy storage and improving project profitability [4]. 3. Summary According to the Table of Contents 3.1 Domestic Market: New Installation Peak Front - loaded, Bid Scale Remains High 3.1.1 Domestic Energy Storage New Installation: Demand Front - loaded in June, "531" Rush - installation Drove High H1 Installations - In H1 2025, domestic new energy storage installations reached 21.9GW/55.2GWh, with a capacity scale up 76.6% year - on - year. The "531" rush - installation in new energy power stations drove synchronous energy storage installations, advancing the grid - connection peak to before June. In June, new installations were 4.1GW/10.3GWh, a 19.3% year - on - year decline [1][8]. - In terms of application scenarios, grid - side energy storage dominated, accounting for 60%. In terms of technology, lithium iron phosphate was mainstream, and long - duration energy storage was gradually penetrating [9]. 3.1.2 Domestic Energy Storage Future Installation: Bid Scale Keeps Rising, Annual Installation Expected to Slightly Increase - In June 2025, the energy storage bid scale continued to grow rapidly, reaching 4.6GW/23.5GWh, a 128% year - on - year increase in capacity. Independent energy storage projects accounted for 88% [13]. - The full - year new installation is expected to reach 110.8GWh, a 3% increase year - on - year. After the cancellation of mandatory energy storage policies, the bid scale still increased significantly. The proportion of independent energy storage in bid projects is expected to continue rising, and the average charge - discharge duration of front - of - meter energy storage is expected to drop to 2.3 hours [17]. - Behind - the - meter energy storage growth may be slower than expected due to time - of - use electricity price policy adjustments. It is expected to add 4.7GW/10GWh in 2025, a 27% increase year - on - year [18]. 3.2 Overseas Market: Planned Scales in Emerging Countries Keep Increasing, European and American Markets Perform Well 3.2.1 US Energy Storage Installation: Completion Rate Improves as Expected, Installation Forecast Remains High - In May, the new grid - connected energy storage (≥1MW) in the US was 1555.1MW, a 44% year - on - year increase, with a project planning completion rate of 57%. The annual new installation is expected to be 15.8GW/49.8GWh, a 34% increase year - on - year [21]. - In Q1 2025, the new installation was 2042MW/5034MWh, with a capacity installation up 39% year - on - year. Front - of - meter energy storage maintained high - speed growth, while behind - the - meter energy storage had different performances: weak commercial and industrial installations and strong household energy storage [26]. 3.2.2 European Energy Storage Installation: Large - scale Energy Storage Rises, Household Energy Storage Remains Weak - In June 2025, Germany's new energy storage installations were 243MW/456MWh, with a capacity down 7% year - on - year and up 12% month - on - month. Large - scale energy storage boomed, while household energy storage continued to be weak [29]. - In the UK, large - scale energy storage in Q2 2025 increased by 141% year - on - year, and the annual new installation is expected to be 3.4GWh, a 17% increase year - on - year. In Italy, the new installation in Q1 2025 decreased by 57.8% year - on - year, and the annual new installation is expected to be 5.1GWh, a 15% decrease year - on - year [33]. 3.2.3 Emerging Countries Installation: Slow Commissioning Speed, Planned Scales Keep Increasing - In Chile, the actual commissioning speed is slow, but the planned scale has increased significantly. The annual new installation is expected to be 4.3GWh, an 83% increase year - on - year [35][36]. - In Australia, the energy storage market construction accelerated in Q1 2025. The annual new installation is expected to be around 10GWh. In India, the mandatory energy storage policy has brought new increments [38][39]. 3.2.4 Energy Storage Battery and Inverter Export Tracking: Exports Recover, Overseas Demand is Stable and Positive - In June 2025, energy storage battery exports rebounded to 8.5GWh, a 35.2% year - on - year and 54.7% month - on - month increase. Inverter exports decreased to 512.9 million units, a 12.4% year - on - year and 13.1% month - on - month decrease [40]. - In June, exports to the US and Europe showed different trends. The cumulative exports of inverters to Europe from January to June increased by over 40% year - on - year, indicating strong European demand [40]. 3.3 Energy Storage Industry Price Tracking: Domestic Energy Storage System Bid Price Rebounds, Overseas Prices Remain Stable 3.3.1 Domestic Energy Storage - related Prices: Battery Cells Remain Stable, Terminal Bid Price Rebounds - In June, the average bid price of 2 - hour energy storage systems was 0.64 yuan/Wh, a 16.6% month - on - month increase, while that of 4 - hour systems was 0.432 yuan/Wh, a 9.6% month - on - month decrease [42]. - In June, energy storage battery cell prices remained stable. Enterprises' profits have recovered but are still at a low level. Inventory may face upward pressure after the end of the domestic rush - installation [48]. 3.3.2 Overseas Energy Storage - related Prices: Energy Storage System Prices Remain Flat, European Residential Electricity Prices Rise Slightly - In recent months, overseas energy storage system prices have remained stable. The US price is 0.835 yuan/Wh, Europe and Australia are 0.755 yuan/Wh, and Chile, South Africa, and the Middle East are 0.59 yuan/Wh [50]. - In June, European residential electricity prices rose slightly. Due to weak natural gas prices and soft Asian demand, European electricity prices are expected to fluctuate weakly [53]. 3.4 Policy Tracking: Independent Energy Storage Market Entry Accelerates, Capacity Subsidies are Imminent - From June to July, nine important energy - storage - related policies were introduced, focusing on power market mechanisms and energy storage subsidies. Independent energy storage marketization is accelerating, and capacity subsidy mechanisms in some regions are expected to improve project profitability [4][55].

Core Viewpoint - The global energy storage battery market is experiencing significant growth, with a projected shipment of 258 GWh in H1 2025, representing a 106% year-on-year increase. Domestic manufacturers are leading this growth with a shipment of 252 GWh, up 109% year-on-year, while overseas manufacturers shipped 6 GWh, a 42.5% increase [1]. Group 1: Market Dynamics - The market is currently dominated by leading players such as CATL, BYD, and Envision, with a trend towards vertical integration, particularly by BYD, which is increasing its share of self-owned storage systems [3]. - In H1 2023, front-of-the-meter storage battery shipments accounted for 79% (203.4 GWh) of total shipments, while behind-the-meter battery shipments made up 21% (54.6 GWh) [3]. Group 2: Emerging Markets - Significant acceleration in the delivery of large-scale energy storage projects in emerging markets is noted, including projects like BYD's 12.5 GWh in the Middle East and collaborations in Chile and Australia [5]. - Traditional markets are influenced by regulatory changes, such as China's 136 document leading to an earlier rush for installations, and the U.S. experiencing stockpiling due to the IRA amendments [5]. Group 3: User-side Developments - The commercial and industrial sector in China is primarily focused on arbitrage from peak and valley price differences, but recent policy changes in Jiangsu have led to a cautious market sentiment [7]. - New commercial scenarios, such as solar-storage charging and data centers, are witnessing rapid growth despite the overall market's cautious outlook [7]. Group 4: European Market Incentives - The European commercial and residential storage markets are benefiting from substantial subsidy policies, with the Netherlands allocating €100 million for battery storage projects linked to solar installations [8]. - Belgium offers a 40% tax deduction for investments in solar and storage systems, the highest in its history, while Greece's enterprise storage plan provides up to 50% subsidies for businesses [9].