J P M O R G A N Asia Pacific Equity Research 03 December 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. Asia Power Equipment Stephen Tsui, CFA AC (852) 2800-8592 stephen.tsui@jpmorgan.com Vento Suen (852) 2800-8546 vento.suen@jpmorgan.com Alan Hon Expe ...

50% acquisition of EPH flexible generation in Europe November 17, 2025 Scandale CCGT, Italy Key deregulated markets to scale up the integrated model power capacity + + = ~70% and generation USA Europe Brazil Economic growth driving power demand growth Integrated Power Strategy as presented on Sept. 29th Sharpening focus on key deregulated markets USA, Europe, Brazil Leveraging the multi-energy model to strengthen Oil & Gas positions Selected renewable markets Selectively targeting large-scale growing market ...

Core Insights - Eos Energy Enterprises, Inc. has announced a $24 million economic development package in partnership with Pennsylvania to enhance U.S. manufacturing and create 1,000 high-quality jobs [1][2] - The expansion includes a new 432,000 sq. ft. manufacturing facility in Marshall Township, PA, aimed at increasing annual energy storage capacity to 8 GWh [3] - Eos will also establish a software hub in Pittsburgh to support its battery management system and enhance its workforce [4][5] Group 1: Economic Development and Job Creation - The joint $24 million economic development package is designed to support U.S. manufacturing and job growth, particularly in the energy sector [2] - The initiative is expected to create 1,000 high-quality jobs, reflecting a commitment to advancing energy innovation in Pennsylvania [2] Group 2: Manufacturing Expansion - Eos will expand its manufacturing capacity with a new facility that will complement its existing operations, transitioning to high-efficiency, large-scale production [3] - The new facility is part of a broader strategy to scale operations in response to increasing market demand, particularly driven by advancements in AI infrastructure [2][3] Group 3: Technological Innovation - The establishment of a software hub at Nova Place in Pittsburgh will focus on the development of Eos' proprietary battery management system, DawnOS [4][5] - Eos plans to deepen its partnership with Carnegie Mellon University to cultivate a skilled workforce in robotics, AI, and engineering [5][6] Group 4: Strategic Vision - Eos aims to position Pennsylvania as a national hub for energy, technology, and manufacturing innovation, reinforcing its commitment to energy independence [1][4] - The company's CEO emphasized the importance of American manufacturing and innovation in achieving a more energy-efficient and secure future [3]

Core Insights - The company emphasizes the modernization and reliability of the grid business, highlighting the acquisition of REIVAX, a company with a strong background in control systems since 1987 [1] - REIVAX operates in Brazil, Canada, and Portugal, with approximately 60% of its revenue generated from foreign markets, indicating a significant international presence [1] Group 1 - The grid is becoming increasingly complex, necessitating more intelligent control systems to manage diverse energy sources such as solar and diesel [1] - The company is focusing on distributed resources and energy intelligence, particularly in the context of microgrids, which utilize multiple generation sources including biomass, solar, and wind [2] - The consumption patterns in microgrids are more complex than traditional home energy use, as they may serve larger facilities like hotels [2]

Financial Performance - Q1 FY'26 - Net sales increased by 5% year-over-year to $893 million[20, 37] - Adjusted operating earnings increased by 8% year-over-year to $114 million[20, 39] - Adjusted EBITDA increased by 2% year-over-year to $123 million[20, 41] - Adjusted EPS increased by 5% year-over-year to $2.08, but decreased by 6% excluding the 45X tax credit[20, 42] - Free cash flow was negative $32 million, a decrease of $6 million year-over-year[20] - Gross margin was 28.4%, an increase of 40 bps year-over-year, but 24.1% excluding the 45X tax credit[21] Q2 FY'26 Guidance - The company expects net sales to be flat year-over-year, in the range of $870 million to $910 million[9, 60] - Adjusted EPS is expected to increase by 26% year-over-year, or 8% excluding the 45X tax credit, with a range of $2.33 to $2.43[9, 60] - The company anticipates a $35 million to $40 million benefit to the cost of sales from IRC 45X[9, 60] Strategic Initiatives - The company introduced EnerGize, a strategic framework to transform and grow the company[9, 10] - The company is restructuring for operational efficiency, including an 11% workforce reduction, expecting $80 million in annualized savings[12] - The company increased its buyback authorization by $1 billion to be executed over 5 years and returned $159 million to shareholders through buybacks and dividends[9]

Investment Rating - The report reinstates CATL-A and initiates CATL-H at a Buy rating [5] Core Insights - CATL is projected to achieve a 25% EPS CAGR from 2024 to 2030, driven by strong volume growth, product mix improvement, and unit profit expansion [5] - The blended unit gross profit (GP) is expected to improve from Rmb 152/kWh in 2025 to Rmb 169/kWh in 2030, with a detailed analysis of unit GP by geography and product [5] - CATL is anticipated to maintain a global market share of approximately 40% from 2025 to 2030, supported by supply consolidation in the Chinese market and strong positioning in Europe and the Rest of World (RoW) [5] - The launch of new EV models, such as Xiaomi YU7, is expected to boost CATL's Qilin battery penetration, contributing significantly to sales volume growth [5] - The upcoming 2Q25 results are expected to focus on unit GP, CAPEX, and the US market, with a projected blended battery unit GP of Rmb 150/kWh [5] Summary by Sections Unit GP Expansion - CATL's unit GP is projected to rise from Rmb 152/kWh in 2025E to Rmb 169/kWh in 2030E, indicating a path for unit GP expansion [5] Market Share - CATL is expected to maintain a global market share of around 40% through 2025E-2030E, aided by consolidation in the domestic market and strong international positioning [5] Product Launch Impact - The introduction of new EV models, particularly from Xiaomi, is likely to enhance CATL's battery sales, with significant contributions from the Qilin battery [5] Financial Projections - The report forecasts a 25% EPS CAGR for CATL from 2024 to 2030, driven by robust growth and improved product mix [5]