Core Viewpoint - The new energy sector is showing signs of stabilization and recovery after nearly four years of deep adjustment, with significant increases in relevant indices since the second half of the year [1][2]. Group 1: Market Performance - The China Securities New Energy Index has seen a cumulative increase of 43% since the second half of the year, with the lithium battery index rising by 17.12% in September and the new energy vehicle index increasing by 16.22%, significantly outperforming the Shanghai and Shenzhen 300 Index, which only rose by 2.59% during the same period [1]. - The current market dynamics indicate a potential shift from a short-term recovery to the beginning of a new upward cycle in the new energy sector [1]. Group 2: Supply and Demand Dynamics - The core contradictions in the new energy sector have shifted, with prices and profits across various segments at historically low levels, but positive changes are emerging on the supply side due to market clearing mechanisms and "anti-involution" policies [2]. - There are signs of price increases across the battery supply chain, indicating a reversal in supply and demand after nearly four years of adjustment [2]. - Demand for lithium batteries remains strong, with a compound annual growth rate of 20% to 30% supported by diverse applications beyond just electric vehicles, including electric ships, robotics, and energy storage [2]. Group 3: Industry Trends - The lithium battery industry is positioned at a new starting point of "volume and price increase," with expectations of a supply-demand gap narrowing from 2024, leading to a sustained price increase cycle [2]. - The solid-state battery technology has made significant advancements, with breakthroughs in key technical challenges, potentially allowing for a range of over 1000 kilometers for next-generation batteries, significantly enhancing energy density and overall performance [3]. Group 4: Investment Strategy - The investment strategy emphasizes a focus on companies with strong fundamentals and competitive positions in high-end manufacturing and technology sectors, while also optimizing the portfolio through in-depth research [5][6]. - The current portfolio is balanced between growth sectors driven by AI and industries in a "turnaround" phase, such as new energy and military industries, aiming to capture both valuation recovery and profit enhancement opportunities [6].

Core Viewpoint - The renewable energy sector is showing signs of stabilization and recovery after nearly four years of deep adjustment, with significant increases in indices related to lithium batteries and electric vehicles, outperforming the broader market [1][2] Industry Overview - The current state of the renewable energy sector is characterized by "positive changes" and a "reversal of difficulties," with prices and profits at historical lows, indicating a shift in the core contradictions of the industry [2] - The lithium battery supply chain is experiencing price increases, suggesting a reversal in supply and demand after four years of adjustment [2] Demand and Supply Dynamics - Demand for lithium batteries remains strong, with applications expanding beyond electric vehicles to include electric ships, robots, low-altitude economy, energy storage, sanitation vehicles, and heavy trucks, supporting a compound annual growth rate of 20% to 30% [2] - The industry is expected to face a supply-demand gap starting in 2024, leading to a sustained price increase cycle [2] Lithium Battery Industry Insights - The lithium battery industry is at a new starting point characterized by simultaneous increases in volume and price, driven by diverse demand [2] - Leading companies in the lithium battery supply chain are operating at full capacity, indicating a tightening supply situation [3] Solid-State Battery Developments - Solid-state batteries are viewed as the "future battery" of the renewable energy industry, with recent breakthroughs in technology significantly enhancing performance, including potential range improvements [3] - However, solid-state batteries have not yet achieved mass production and lack commercial competitiveness due to low lithium prices [3] Investment Strategy - The investment strategy focuses on maintaining a clear framework based on company fundamentals and industry competition, emphasizing high-end manufacturing and technology sectors [4][5] - The current portfolio is balanced between growth sectors like AI and industries in a "reversal of difficulties" phase, such as renewable energy and military [5] - In AI investments, the focus is on efficiency-driven internet leaders, new application-driven companies, and cloud service providers, while military investments are driven by increasing domestic and international demand [5]