Core Viewpoint - The strategic cooperation between Fulin Precision (富临精工) and CATL (宁德时代) marks a significant advancement in the lithium battery cathode material sector, with a total prepayment of 1.5 billion yuan aimed at expanding production capacity and securing supply [1][2]. Group 1: Agreement Details and Capacity Support - The agreement stipulates that CATL will pay a total of 1.5 billion yuan in prepayments, with 500 million yuan due in September 2025 and 1 billion yuan in November 2025, specifically for the construction of the lithium iron phosphate production line and raw material setup [2]. - The 1.5 billion yuan investment is expected to support an expansion of 100,000 tons of production capacity, complementing Fulin Precision's existing capacity of 300,000 tons and the ongoing construction of an additional 200,000 tons in Sichuan [2]. Group 2: Product Competitiveness - Fulin Precision's high-pressure dense cathode material technology is industry-leading, with expectations that the fifth-generation product structure will reach 70% by the end of the year [2]. - High-pressure dense products offer higher energy density and cycle life, aligning with CATL's demand for high-end batteries, which has already translated into unit profitability for Fulin Precision [2]. Group 3: Demand Drivers - CATL has raised its 2026 production guidance from 900 GWh to 1,100 GWh, reflecting a year-on-year growth of approximately 22%, driven by rapid growth in power demand and the emerging storage demand [2]. - The power market is expected to maintain high growth through 2025, while the storage market is anticipated to become a core driver of demand growth in 2026, thereby increasing the demand for lithium iron phosphate cathode materials [2]. Group 4: Profitability Improvement - The company has provided approximately 100 million yuan in financial support to its associate company, facilitating the smooth construction of the lithium dihydrogen phosphate project, which is expected to reduce costs by 2,000 yuan per ton without price increases [3]. - The premium on high-pressure dense products is expected to enhance unit profitability, further driving the company's overall profit growth [3].