Summary of Conference Call Notes Industry Overview - The conference call focused on the **China Materials** industry, particularly in relation to **lithium**, **copper**, and **aluminum** sectors, as well as companies like **CATL**, **Zijin Mining**, and **Chalco** [1][2][3]. Key Insights 1. **Investor Sentiment on Lithium**: - There is significant interest in lithium due to a recent price rally driven by strong expectations in **Energy Storage Systems (ESS)**. Most investors are bullish on lithium [2][3]. - A cautious near-term outlook is suggested due to a slowdown in **Electric Vehicle (EV)** sales since November, which may impact battery production in Q1 2026E. A more constructive view is expected post-Chinese New Year (CNY) when demand is anticipated to increase [2][4]. 2. **Copper and Aluminum Market**: - Investors show little push-back on copper and aluminum stocks, with a preference for aluminum over copper at current price levels. **Zijin Mining** received the most follow-up inquiries from investors [2][4]. - The aluminum market is expected to remain tight in 2026E, which is supportive for prices and margins. The potential risks associated with aluminum supply are believed to be underappreciated by the market [4]. 3. **Company-Specific Insights**: - **CATL** is highlighted as the most well-owned name among US investors, with discussions around its risk/reward profile being favorable. It is considered to have the lowest risk among ESS-related investments [2][4]. - Other companies mentioned include **China Hongqiao**, **Ganfeng Lithium**, **Guangzhou Tinci Materials Technology**, **Hunan Yuneng New Energy Battery Material**, and **Yunnan Energy New Material**, which are seen as having potential upside in a rising price environment [4][7]. 4. **Market Dynamics**: - The call noted a shift in investor behavior, with many now open to adding selective Chinese equities to their portfolios. This marks a change from previous meetings where the focus was more on sector read-throughs and channel checks [3][4]. Additional Considerations - The report emphasizes the importance of understanding the implications of **China's anti-involution policies** on the materials sector, although specific details were not elaborated [1][2]. - The overall sentiment indicates a positive outlook for the battery price up-cycle into 2026E, with expectations of stronger ESS demand driving market dynamics [4]. Companies Mentioned - **CATL** (Contemporary Amperex Technology Co Ltd) - **Zijin Mining Group Co Ltd** - **Aluminum Corporation of China** - **China Hongqiao** - **Ganfeng Lithium** - **Guangzhou Tinci Materials Technology** - **Hunan Yuneng New Energy Battery Material** - **Yunnan Energy New Material** [7].

Summary of Sungrow Power Supply Conference Call Company Overview - **Company Name**: Sungrow Power Supply - **Established**: 1997 - **Headquarters**: Hefei, Anhui, China - **Listing**: Shenzhen Stock Exchange since 2011 - **Industry**: New energy equipment, including photovoltaic inverters, wind energy converters, energy storage systems, and floating PV systems - **Market Position**: Second-largest energy storage systems manufacturer globally with a 14% market share in 2024 [9][10] Key Industry Insights US BESS Demand - **Expectation**: Strong US Battery Energy Storage System (BESS) demand anticipated to persist into 2026-27, estimated at around 50GWh in 2026 [1] - **Drivers**: Substantial projects initiated by the end of 2025 to circumvent Prohibited Foreign Entity (PFE) constraints [1] - **Partnerships**: Actively collaborating with global battery suppliers to meet non-PFE requirements [1] - **Tariff Impact**: Existing order tariffs will be shared with customers, potentially impacting earnings by approximately Rmb0.5 billion in 2025 [1] AIDC Influence on BESS - **Growth Projection**: Over 200GWh incremental BESS demand expected from Artificial Intelligence Data Centers (AIDC) between 2025-2030 [2] - **Functions**: 1. Backup power and load volatility management with a 50% attachment rate and 2-hour duration 2. Grid power supply, typically associated with solar, requiring longer durations of over 4 hours [2] Global Market Growth - **Ex-US Demand**: Anticipated robust growth in BESS demand outside the US: - 50% growth in Europe - 50-100% growth in Asia-Pacific (APAC) - Over 60% growth in the Middle East and Africa [3] - **C&I Storage Demand**: Global Commercial & Industrial (C&I) storage demand projected to triple from 20GWh in 2025 to 60GWh by 2060, driven by dynamic electricity pricing [3] - **Profit Margins**: Over 40% Gross Profit Margin (GPM) expected in high-end markets (Europe, Australia) versus less than 10% for shipments to China [3] Financial Performance and Valuation - **Revenue Growth**: Projected revenues from Rmb40.257 billion in 2022 to Rmb200.739 billion by 2029 [5] - **Earnings Growth**: Net earnings expected to rise from Rmb3.593 billion in 2022 to Rmb28.602 billion by 2029 [5] - **Valuation**: Current valuation at 20x 2026E Price-to-Earnings (PE) ratio deemed undemanding, with a "Buy" rating maintained [4] Investment Outlook - **Price Target**: Rmb225.00 with a current price of Rmb200.50 as of November 5, 2025 [6] - **Forecast Returns**: Expected stock return of 13.2%, including a 12.2% price appreciation and a 1.0% dividend yield [8] Risks and Considerations - **Market Risks**: Potential risks include slowing global solar and energy storage demand, slower inverter and energy storage system cost reductions, and lower-than-expected average selling prices (ASP) [10] Additional Insights - **Upcoming Catalysts**: Anticipated positive catalysts include higher US Energy Storage System (ESS) shipments, improved demand in the EU, and more details on new AIDC products [12]

Group 1 - The core viewpoint is that AI is driving the evolution of power cabinets towards the 100kW-MW level, leading to technological changes in energy conversion and an increase in equipment prices and market dynamics [1] - Global AIDC capital expenditure is experiencing high growth, driven by the demand for data centers as essential infrastructure for AI development, with total installed capacity expected to exceed 100GW by 2025 [1] - CSPs and Colo operators are anticipated to become the main investors in AIDC, with electrical equipment accounting for approximately 35% of data center investment [1] Group 2 - The power supply technology for data centers is evolving from traditional AC power with UPS to direct current and high-voltage direct current systems, aiming to enhance overall power supply efficiency and reduce CAPEX [2] - The market for external power supply is projected to reach 99.6 billion yuan by 2030, with a CAGR of approximately 50% from 2024 to 2030 [2] Group 3 - AI server power supplies are following the OCP ORV3 standard, with increasing power density as GPU power rises, and the global server power supply market is expected to reach 147 billion yuan by 2030, with a CAGR of about 42% [3] - The competition in the power supply industry is heavily influenced by technology and customer resources, with a focus on companies certified by major CSPs [3] Group 4 - The characteristics of AI computing chips create new demands for auxiliary power sources like BBU and supercapacitors, which help stabilize power fluctuations and improve energy storage efficiency [4] - The penetration of products such as active power filters and solid-state DC circuit breakers is expected to accelerate alongside the development of AIDC [4]