Summary of EVE Energy's Conference Call Company and Industry Overview - **Company**: EVE Energy - **Industry**: Battery manufacturing, specifically focusing on Electric Vehicle (EV) and Energy Storage System (ESS) batteries - **Date of Call**: 21 August 2025 Key Points and Arguments 1. **Core Earnings Growth**: EVE Energy reported an 18% growth in core earnings for 1H25, excluding impacts from stock incentives and bad debt provisions [2] 2. **Power Battery Performance**: The average selling price (ASP) and net profit per unit (NP) for EVE's power battery business deteriorated, despite nearly 60% volume growth [2] 3. **Market Ratings**: Among Chinese battery makers, EVE Energy has a Neutral rating, while CATL-A has an Outperform (OW) rating, and Gotion has an Underweight (UW) rating [2] 4. **Impact of Lithium Prices**: EVE management indicated minimal impact from recent lithium price hikes due to cost pass-through contracts and long-term purchasing agreements [5] 5. **Battery Price Improvement**: EVE's EV battery ASP increased by 7% in 2Q25, attributed to a higher mix of overseas customers [5] 6. **US Market Orders**: US ESS customers continued to place orders until 2027 despite tariffs, with EVE planning to switch production lines to ESS batteries [5][6] 7. **Production Growth Outlook**: Management expects a 15-20% production growth in 3Q25 and a 30-40% growth in EV and ESS batteries for 2026 [6] 8. **Capital Expenditure (Capex)**: EVE's capex increased by 104% in 1H25, with guidance of Rmb10 billion per annum from 2025 to 2027, indicating a longer capex cycle than anticipated [6] Financial Performance Highlights 1. **P&L Summary**: - Net Sales for 2Q25: Rmb15.373 billion, a 20% QoQ increase - Gross Profit for 2Q25: Rmb2.685 billion, with a gross margin of 17.5% [7] - Operating Profit for 2Q25: Rmb601 million, a 54% decrease QoQ [7] - Net Profit for 2Q25: Rmb504 million, a 54% decrease QoQ [7] 2. **Battery Shipments**: EVE's total shipments for EV and ESS batteries in 1H25 were 50 GWh, reflecting a 45% year-over-year growth [8] 3. **ASP and Profitability**: EVE's gross profit per unit for power batteries was Rmb0.07 in 1H25, indicating challenges in maintaining profitability [13] Additional Insights 1. **Industry Trends**: The industry is experiencing a capex upcycle led by tier-1 and top tier-2 players, which is beneficial for equipment suppliers [6] 2. **Customer Demand**: Despite potential slowdowns in China EV sales, EVE's management remains optimistic about overseas sales growth [6] 3. **Competitive Landscape**: EVE's performance is compared with other battery makers like CATL, Gotion, and CALB, highlighting varying growth rates and profitability metrics [8][10] This summary encapsulates the critical insights from EVE Energy's conference call, focusing on financial performance, market outlook, and strategic initiatives within the battery manufacturing industry.

Summary of Key Points from ICCSINO Expert Call on Energy Storage Systems (ESS) Industry Overview - **Industry**: Energy Storage Systems (ESS) - **Company**: ICCSINO Core Insights 1. **Global ESS Battery Shipment**: - In the first half of 2025, global ESS battery shipments reached **258 GWh**, representing a **106% year-over-year increase**. - Projections for global ESS battery shipments are **550 GWh** in 2025 and **650 GWh** in 2026, indicating growth rates of **57%** and **18%** respectively [2][3]. 2. **ESS Battery Demand**: - Demand for ESS batteries has been revised upward for 2025 due to strong orders in **Northwest China** and lower battery prices. - Emerging markets, particularly **Australia** and **Southeast Asia**, are experiencing robust demand, with shorter delivery times of approximately **6-8 months** compared to **1 year** in traditional markets like the US and Europe [3]. 3. **China ESS Battery Pricing**: - The price of ESS batteries in China has increased by approximately **Rmb 0.02/wh** for leading producers during June to July 2025, driven by high utilization rates and strong orders [4]. 4. **Overseas ESS Battery Pricing**: - The price disparity between Chinese and overseas ESS battery cells is primarily due to higher warranty fees in overseas markets. - Prices in the US, Europe, and Australia range from **Rmb 0.9-1.0/wh**, yielding gross profit margins of over **40%**, while prices in the Middle East and Southeast Asia are lower at **Rmb 0.5-0.6/wh**, resulting in **10-20%** gross profit margins. - Expectations indicate a potential decrease in overseas ESS battery system prices, particularly in Europe and Australia, due to increased competition and lower entry barriers [5]. 5. **US Market Dynamics**: - With capacity additions from Korean battery producers, it is anticipated that the market share of Chinese ESS battery producers in the US may decline starting in **2026** [6]. 6. **Sodium-Ion Battery Outlook**: - The adoption of sodium-ion batteries in the ESS market is expected to be slower than previously anticipated due to high costs [6]. Additional Important Insights - The strong demand in emerging markets and the upward revision of demand forecasts highlight significant growth potential in the ESS sector, particularly in regions with favorable pricing and shorter delivery timelines. - The competitive landscape is evolving, with potential pricing pressures in overseas markets that could impact profit margins for producers. - The anticipated decline in market share for Chinese producers in the US market underscores the importance of monitoring competitive dynamics and technological advancements in the battery sector.

Investment Rating - The report does not explicitly state an investment rating for the battery materials industry, but it indicates a positive sentiment towards the sector based on production increases and market conditions. Core Insights - The battery production pipeline is estimated to increase by 1% month-over-month (MoM) and 39% year-over-year (YoY) in July 2025, with electric vehicle (EV) battery production remaining flat MoM, while energy storage system (ESS) battery demand is expected to grow by 4% MoM [1] - Lithium carbonate is projected to rise by 4% MoM, contrasting with the largely flat trends observed in other battery materials [1] - Market sentiment has been buoyed by positive discussions regarding potential supply-side reforms in China, despite ongoing increases in production output [1] Summary by Sections Battery Production Trends - Battery production is estimated to be up by 1% MoM [3] - Cathode production is expected to remain flattish MoM [5] - Anode production is projected to increase by 1% MoM [7] - Separator production is also estimated to rise by 1% MoM [9] - Electrolyte production is expected to be flattish MoM [11] Market Sentiment and Demand - The market sentiment is influenced by positive discussions and hopes for supply-side reforms in China, which have led to increased interest in equities and futures related to battery materials [1] - The demand for ESS batteries is forecasted to continue its upward trend, with a 4% MoM increase expected [1]