Summary of Conference Call Notes Industry Overview - **Industry**: China Battery Supply Chain - **Recent Performance**: The Solid-State Battery (SSB) Index has increased by 15% since the last trading day of August, outperforming the CSI 300, which remained unchanged at 0% [2][3] Core Insights and Arguments - **Market Dynamics**: - The recent rally in battery stocks is primarily driven by thematic factors rather than fundamental ones. There is optimism regarding a government review of state-funded projects scheduled for September 2025 [2][3]. - Energy storage demand has exceeded market expectations, leading to price increases in batteries and materials [2]. - **Stock Valuation**: - Wuxi Lead is currently trading at a price-to-earnings ratio of 47x for the next twelve months, which is close to its peak in 2021 [2]. - The report suggests that the market may have overreacted in the short term, as leading battery manufacturers are on track with their 2027 trial production timelines [3]. - **Investment Recommendations**: - Preferred stocks include Jiangsu Lopal and Shenzhen Kedali, with a focus on fundamentals and reasonable valuations. Jiangsu Lopal is highlighted as the biggest beneficiary of Korean adoption of LFP cathodes, while Kedali is noted for its strong execution and robotics options [4]. Important but Overlooked Content - **Catalyst Timing**: - Historical patterns indicate that stock rallies have been linked to specific catalysts, such as government subsidies and product launches. The expectation is that the market will stabilize after the government review of SSB projects is reported [3][6]. - **Risks**: - The electric vehicle (EV) battery materials sector faces risks including volatile commodity prices, government regulations, and global climate policies that could significantly impact performance [9]. - Company-specific risks for Jiangsu Lopal include execution risks related to overseas capacity addition and potential shifts in US policy that could affect competitiveness [10]. - For Kedali, risks include slower-than-expected capacity building and potential loss of market share due to competition and rising raw material prices [11]. Conclusion - The current landscape of the China Battery Supply Chain is characterized by a significant rally in stock prices driven by thematic factors, with a strong emphasis on the importance of upcoming government reviews and the need for a focus on fundamental valuations. Investors are advised to consider the inherent risks and the potential for market rationalization in the near future.