Industry Highlights - China's salt lake lithium carbonate project has officially launched sales, with an annual production capacity of 20,000 tons and first batch purity exceeding 99.6% [1] - Jiangsu Nona New Materials is set to begin trial production of a 200,000-ton electrolyte project in October, with an investment of approximately 1.8 billion yuan [2] - SK On is undergoing restructuring, merging with SK Enmove to enhance competitiveness in the electric vehicle battery sector, with the new entity expected to be established by November 2025 [3] - German silicon-based anode company NorcSi has completed a financing round of 10.7 million euros to commence industrial production of pure silicon anode materials [4] Lithium Battery Material Market Lithium Carbonate - Domestic lithium carbonate prices are fluctuating around 68,000 yuan per ton, with market speculation about a potential 30-day shutdown of a lithium mine in Jiangxi [7] - Latest prices for lithium carbonate as of August 7: Battery-grade 99.5%: 71,000-73,000 yuan/ton; Industrial-grade 99.2%: 68,500-69,500 yuan/ton [8] Ternary Materials - Ternary material prices have seen a slight increase, with a projected 1,000 tons of additional supply from two major suppliers [9] - Current prices for ternary materials as of August 7: 5-series single crystal: 123,000-129,000 yuan/ton; 8-series 811 type: 142,000-148,000 yuan/ton [9] Lithium Iron Phosphate - The lithium iron phosphate market remains stable, with an expected production capacity of 300,000 tons by the end of the year, including a significant expansion by Bangpu [10] - Latest prices for lithium iron phosphate as of August 7: Power type: 32,100-33,200 yuan/ton; Energy storage type: 30,800-31,500 yuan/ton [10] Anode Materials - The anode materials market is stable, with prices closely aligned with production costs, and limited new orders for needle coke [11] - Latest prices for anode materials as of August 7: Natural graphite high-end products: 50,000-65,000 yuan/ton; Artificial graphite high-end: 31,800-64,800 yuan/ton [12] Separator - The separator market is stable, with a decline in orders from energy storage sectors due to reduced procurement from two major companies [13] - Latest prices for separators as of August 7: Base film 9μm/wet: 0.55-0.825 yuan/sqm; Base film 16μm/dry: 0.35-0.5 yuan/sqm [13] Electrolyte - The electrolyte market shows stable prices, with a slight increase in orders from energy storage applications [14] - Latest prices for electrolytes as of August 7: Lithium hexafluorophosphate electrolyte: 49,000-51,500 yuan/ton; Power ternary electrolyte: 19,000-23,400 yuan/ton [14] Lithium Battery Demand Battery Production - The domestic battery market is stable, with a slight increase in production driven by export preparations [15] - Latest prices for lithium batteries as of August 7: Square ternary power cell: 0.38-0.45 yuan/Wh; Square lithium iron phosphate power cell: 0.26-0.355 yuan/Wh [16] New Energy Vehicles - Passenger car sales reached 462,000 units, with new energy vehicle sales at 245,000 units, showing a year-on-year increase [16] - Notable developments include BYD's fifth-generation DM upgrade and Tesla's declining sales in Europe [16] Energy Storage - The energy storage battery market is performing well, with leading companies operating at full capacity and small manufacturers taking on contract orders [17] - Increased demand for energy storage orders is noted in Europe and Australia, while the U.S. market remains stable despite tariff disruptions [18]

Industry Overview - The lithium battery industry is currently at the bottom of its cycle, but the demand for components like electrolytes remains uncertain, leading to ongoing operational pressures for manufacturers in the second half of the year [1][6] - The average price of various electrolytes in China is below 20,000 yuan per ton, marking a near three-year low [1][2] Company Performance - Shida Shenghua (603026.SH) is expected to report a net profit loss of 52 million to 60 million yuan for the first half of the year, with a year-on-year decrease in net profit of 236.64% to 257.66% [1][2] - The company reported a net profit loss of approximately 3.15 million yuan in the second quarter, following a loss of 28.54 million yuan in the first quarter [2] Factors Affecting Profitability - The loss is attributed to three main factors: high fixed costs due to underproduction at the Wuhan facility, declining prices of methyl tert-butyl ether products, and falling prices of lithium fluoride and its raw material lithium carbonate [2][4] - The company's gross margin has significantly decreased from 31.5% in 2021 to below 6% in 2024, with a sales gross margin of only 5.6% and a net profit margin of -3.42% as of the first quarter [5] Market Dynamics - The electrolyte market is characterized by a supply-demand imbalance, with low operating rates and a concentration of orders among leading companies, while smaller firms face reduced orders or even shutdowns [3][6] - The price of electrolytes is expected to remain under pressure, with projections indicating a price range of 16,000 to 20,000 yuan per ton in the second half of the year [6] Future Outlook - The potential for price recovery in the electrolyte market is limited, with weak cost support from key raw materials like lithium hexafluorophosphate [5][6] - The industry may see some demand growth in the second half, but significant improvements are uncertain unless there is an unexpected surge in demand [6]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company's profitability is under pressure in 2024, but lithium battery demand is expected to recover in 2025 [1][7] - Revenue for 2024 is projected to decline by 20.30% year-on-year, with a total revenue of 2.112 billion yuan, while net profit is expected to be a loss of 435.7 million yuan [1][7] - The company anticipates a significant recovery in net profit in 2025, with an expected profit of 248.3 million yuan, representing a year-on-year increase of 156.99% [1][7] Financial Summary - Total revenue forecast for 2023A is 2.65 billion yuan, decreasing to 2.112 billion yuan in 2024A, and expected to rise to 2.9084 billion yuan in 2025E [1][8] - The net profit for 2023A is 171.7 million yuan, projected to be a loss of 435.7 million yuan in 2024A, and a profit of 248.3 million yuan in 2025E [1][8] - The earnings per share (EPS) is expected to be -0.42 yuan in 2024A, recovering to 0.24 yuan in 2025E [1][8] Business Outlook - The company's revenue from material automation processing and component businesses is expected to decline in 2024 due to reduced demand in the lithium battery industry, but a recovery is anticipated in 2025 as the industry rebounds [7] - The company is expected to see a gradual increase in orders and profitability as the lithium battery demand recovers and traditional industries like fine chemicals maintain steady growth [7]