Core Viewpoint - Tianhua New Energy is a leading domestic supplier of new energy lithium battery materials, with strong R&D capabilities and a comprehensive industry chain layout [1] Group 1: Business Overview - Tianhua New Energy was established on November 13, 1997, and listed on the Shenzhen Stock Exchange on July 31, 2014 [1] - The company specializes in the production and sales of new energy lithium battery materials, anti-static ultra-clean technology products, and medical device products [1] - It operates within the power equipment - battery - battery chemicals sector and is part of several concept sectors including MSCI China, lithium batteries, energy storage nuclear fusion, superconducting concepts, and nuclear power [1] Group 2: Financial Performance - For Q3 2025, Tianhua New Energy reported revenue of 5.571 billion yuan, ranking 20th out of 44 in the industry, below the industry leader Zhongwei Co. at 33.297 billion yuan and second-place Gree at 27.498 billion yuan [2] - The net profit for the same period was 13.2608 million yuan, ranking 23rd out of 44, significantly lower than the industry leader Putailai at 1.872 billion yuan and second-place China Baoneng at 1.319 billion yuan [2] - The company's revenue was below the industry average of 6.52 billion yuan but above the industry median of 4.845 billion yuan [2] Group 3: Financial Ratios - As of Q3 2025, Tianhua New Energy's debt-to-asset ratio was 26.40%, an increase from 18.70% in the same period last year, and significantly lower than the industry average of 51.96% [3] - The gross profit margin for Q3 2025 was 10.86%, down from 18.62% year-on-year, and slightly below the industry average of 10.89% [3] Group 4: Executive Compensation - The chairman, Pei Zhenhua, received a salary of 1.7256 million yuan in 2024, a decrease of 531,200 yuan from 2023 [4] - The president, Liu Deguang, who joined the company in March 2023, received a salary of 862,000 yuan in 2024 [4] Group 5: Shareholder Information - As of September 30, 2025, the number of A-share shareholders increased by 6.94% to 75,900 [5] - The average number of circulating A-shares held per shareholder decreased by 6.49% to 8,863.51 [5] - Notable changes among the top ten circulating shareholders include a decrease in holdings by E Fund's ChiNext ETF and Southern CSI 500 ETF [5] Group 6: Market Outlook - Huatai Securities noted that in H1 2025, the company was affected by falling lithium prices, with revenue of 3.458 billion yuan (down 6.88% year-on-year) and a net loss of 156 million yuan (down 118.65% year-on-year) [6] - With the recovery of lithium prices in Q3, the firm maintains a buy rating, projecting net profits of 181 million yuan, 461 million yuan, and 844 million yuan for 2025-2027 [6] - The company has a current capacity of 165,000 tons of battery-grade lithium salt products and expects to enhance its upstream resource self-sufficiency with the resumption of the Zulu lithium tantalum mine [6] - The solid-state battery business is anticipated to become a new growth point, with new cathode materials already in mass production and positive feedback on sulfide solid electrolytes [6]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 24.28 RMB [7][5]. Core Views - The company's performance in the first half of 2025 was negatively impacted by a decline in lithium prices, resulting in a revenue of 3.458 billion RMB, down 6.88% year-on-year, and a net loss of 156 million RMB, down 118.65% year-on-year [1][2]. - Despite the challenges faced in the first half, the report anticipates a recovery in the company's performance in the third quarter due to a rebound in lithium prices [1][5]. - The company is expanding its upstream and downstream operations, with the Zulu lithium-tantalum mine in Zimbabwe restarting production, which is expected to enhance its lithium supply [4][5]. Summary by Sections Financial Performance - In Q2 2025, the company reported a revenue of 1.770 billion RMB, a decrease of 9.63% year-on-year but an increase of 4.89% quarter-on-quarter. The net loss for Q2 was 1.59 billion RMB, a significant decline of 147.75% year-on-year [1][2]. - The overall gross margin for the first half of 2025 was 7.21%, down 12.45 percentage points year-on-year, primarily due to a significant drop in lithium prices [2]. Market Dynamics - Recent disruptions in domestic lithium resource supply have led to an increase in lithium prices, with the price of lithium carbonate rising from 61,300 RMB per ton in early July to over 80,000 RMB per ton by late August [3]. - The report suggests that the ongoing high growth in demand from the electric vehicle and energy storage sectors will likely support lithium prices in the near term [3]. Production Capacity and Future Outlook - The company currently has a production capacity of 165,000 tons of battery-grade lithium salts, with the Zulu mine expected to contribute significantly to its lithium supply [4]. - The report projects the company's net profit for 2025 to be 181 million RMB, with an expected EPS of 0.22 RMB [5][11].