27 Jan 2026 12:40:16 ET │ 26 pages Ac t i o n | China Battery Materials Bumpy Road to Price Recovery CITI'S TAKE Since our call on battery price upcycle on back of ESS demand boom (note Sep-25), LFP battery cell price has risen by 8% while battery cost (LFP, spot based) went up by 30%, resulting in lower calculated battery margin. Battery companies are supposed to pass through most of metal-linked cost to downstream and share some of the non-metal cost inflations. This, alongside with concerns from EV sales ...

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. ESS Battery ~640Gwh FY25 shipment, >90% y/y; December shipment review Global ESS battery demand accelerated in FY25, with shipments up >90% y/y to ~640 GWh. December shipments remain firm at 85 GWh with 34% m/m ...

| M | | | | --- | --- | --- | | | | Update | | December 19, 2025 03:33 AM GMT | | | | Contemporary Amperex Technology Co. Ltd. Asia | Morgan Stanley Asia Limited+ | | | Pacific | Jack Lu Equity Analyst | | | | Jack.Lu@morganstanley.com | +852 2848-5044 | | ESS Tariff and ITC Eligibility in | Kaylee Xu | | | | Equity Analyst | | | | Kaylee.Xu@morganstanley.com | +852 2239-1506 | | 2026 | Yiyi Wang Research Associate | | | | Yiyi.Wang@morganstanley.com | +852 3963-4169 | December 19, 2025 03:33 AM GMT Contemp ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Global Energy Storage** industry, focusing on developments in battery technology and electric vehicle (EV) markets across various regions including Europe, China, and North America [1][4]. Key Insights and Arguments Europe - **UK EV Sales**: In November, the UK registered 39,965 new battery electric vehicles (BEVs), marking a growth of 3.6% and a market share of 26.4%, which is 1.5% higher than the previous year. However, this growth is the weakest in two years, with overall registrations falling by 1.6% to 151,154 units due to a 5.5% drop in private demand [2][2]. - **Electrified Vehicles**: Electrified vehicles (including PHEVs and HEVs) now account for 51.4% of registrations, indicating a shift away from petrol and diesel cars [2][2]. China - **Energy Storage Tenders**: In November, China completed tenders for 10GW/29.7GWh energy storage systems, with independent storage projects making up nearly 90%. Inner Mongolia led demand, accounting for nearly 30% of orders [3][3]. - **CATL Developments**: CATL has begun large-scale shipments of next-generation 587-Ah high-capacity battery cells, achieving 2 GWh in shipments and expected to reach 3 GWh this year. The production line reduces costs by 42% and has an energy density of 434 Wh/L, improving performance by 10% over previous models [3][3]. - **LFP Cathode Price Increases**: Chinese lithium iron phosphate (LFP) cathode producers are raising prices due to tightening supply, with processing fee hikes of RMB 3,000 ($420) per ton expected between November 2025 and January 2026 [3][3]. North America - **LG Energy Solution Expansion**: LG Energy Solution is increasing its North American energy storage system (ESS) battery production target to 50 GWh by 2026, up from 30 GWh, with 80% of production to be made and sold locally [5][5]. - **Canadian Solar Reshoring**: Canadian Solar plans to shift manufacturing to North America, acquiring 75.1% of three overseas factories to ensure compliance with U.S. tariffs and restrictions, aiming to secure U.S. market access [5][5]. Additional Important Information - **Environmental Initiatives**: CATL's new factory in Hungary aims to cut emissions by 43% and reduce water and energy use by one-third, with plans to switch to treated wastewater for operations [5][5]. - **Market Dynamics**: The energy storage market is experiencing significant growth driven by demand for renewable energy and data centers, with projections indicating that ESS battery demand may surpass that of electric vehicles [10][10]. - **Price Performance of Key Commodities**: Lithium carbonate (LiCO) spot prices are at $12,940 per tonne, while lithium hydroxide (LiOH) spot prices are at $11,455 per tonne, reflecting the ongoing volatility in the market [6][6]. Conclusion The conference call highlights the evolving landscape of the energy storage and EV markets, with significant developments in technology, production capacity, and market dynamics across key regions. The insights provided indicate both opportunities and challenges for companies operating within this sector, particularly in relation to pricing pressures and regulatory environments.

Asia Pacific Equity Research 04 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. China Battery & Materials 2026 target revised up; December production outlook: CATL the only manufacturer seeing m/m growth J.P. Morgan Securities (Asia Pacific) Li ...

Ganfeng Lithium Co. Ltd. Business Update Call Summary Company Overview - **Company**: Ganfeng Lithium Co. Ltd. - **Industry**: Lithium Chemicals - **Market Cap**: Rmb 113,678 million - **Current Stock Price**: HK$47.44 (as of December 3, 2025) - **Price Target**: HK$43.30, indicating a downside of approximately 9% from the current price [6][6] Key Production and Financial Projections - **Lithium Chemicals Production**: Expected to reach 170-180kt LCE in 2025, with a growth of 50kt LCE in 2026, of which 30-50kt will be sourced from Ganfeng's own mines [1][1] - **Revenue Projections**: - 2025: Rmb 18,467 million - 2026: Rmb 21,868 million - 2027: Rmb 29,124 million [6][6] - **EBITDA Projections**: - 2025: Rmb 1,975 million - 2026: Rmb 4,385 million - 2027: Rmb 6,350 million [6][6] Supply-Demand Dynamics - **2026 Supply-Demand Balance**: Anticipated demand for lithium is approximately 2 million tonnes LCE, with supply expected to be between 2-2.1 million tonnes LCE. This balance may tighten further in 2027 due to limited new supply coming online [3][3] - **Price Outlook**: Management is optimistic about lithium prices and is not currently hedging its production [3][3] Battery Shipment Volumes - **Battery Shipments**: Expected to grow from over 30 GWh in 2025 to 45-50 GWh in 2026. The majority will be for Energy Storage Systems (ESS), with a smaller portion for Electric Vehicle (EV) batteries (5 GWh in 2025) [4][4] - **Customer Distribution**: Approximately 30% of ESS battery shipments will go to Yichu (a Ganfeng-related developer), while 70% will be sold to external customers [4][4] Project Updates - **Goulamina, Mali**: Projected output of 300kt spodumene concentrate in 2025, increasing to 500kt in 2026 [8][8] - **Mariana, Argentina**: Expected output of less than 5kt LCE in 2025, with a growth of 10kt in 2026 [8][8] - **Cauchari-Olaroz, Argentina**: Mild growth expected in 2026 from approximately 35kt LCE in 2025 [8][8] - **PPGS, Argentina**: Environmental licenses obtained, with potential construction start in 2026 and production beginning in 2028 [8][8] - **Songshugang, China**: Currently low priority and not progressing [8][8] Risks and Considerations - **Upside Risks**: - Shortages of lithium raw materials could constrain production increases - Higher-than-expected growth in the EV market [12][12] - **Downside Risks**: - EV market demand may fall below expectations - Faster-than-expected global lithium supply growth could impact profitability [12][12] Analyst Ratings - **Stock Rating**: Equal-weight - **Industry View**: Attractive [6][6] This summary encapsulates the key points from Ganfeng Lithium Co. Ltd.'s business update call, highlighting production expectations, market dynamics, project updates, and associated risks.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Energy Storage System (ESS)** industry, particularly in the context of battery technology and its applications in various sectors, including AI Data Centers (AIDC) and renewable energy integration [2][3][7][28]. Core Insights and Arguments - **Global ESS Demand**: Global ESS demand has exceeded expectations, with battery shipments nearly doubling, leading to a **5-10% price increase**. The 2025 global ESS battery shipment forecast has been raised from **380GWh to 595GWh**, a **57% increase**. The 2026 global ESS installation forecast is raised by approximately **30%**, and the battery shipment forecast is increased by **17%**, from **770GWh to 900GWh** [3][16]. - **China's ESS Market**: China's ESS installation forecasts have been raised by **14-32%** for FY25-30E due to strong policy support and a surge in project filings. The expected growth in global ESS installations for 2026 is now projected at **40-60%** compared to previous expectations of **30%** [7][21]. - **AIDC Use Cases**: The emergence of AIDC use cases for ESS is highlighted, with NVIDIA introducing a new power distribution architecture that integrates Battery Energy Storage Systems (BESS) directly into data center power infrastructure [7][9]. - **Material Price Concerns**: While there are concerns about material price hikes, projections indicate that even if lithium carbonate prices rise significantly, the cost of LFP batteries would remain competitive due to new battery technologies being launched [9][28]. Important but Overlooked Content - **Regional Demand Drivers**: The report identifies various drivers for ESS market demand across regions, including: - **Europe**: Strong demand driven by energy integration and substantial government subsidies [30][32]. - **China**: Supported by national targets and provincial government incentives, leading to improved project economics and a surge in project filings [35]. - **US**: Growth driven by data center deployments, grid reliability needs, and renewable energy integration [34][36]. - **Middle East and India**: Rapid growth expected due to national mandates for renewable energy integration and energy storage [38]. - **Stock Recommendations**: The report recommends stocks in the ESS value chain, including **Sungrow**, **CATL**, and **LGES**, highlighting their potential to capture market opportunities [9][28]. Conclusion - The ESS industry is poised for significant growth driven by technological advancements, supportive policies, and increasing demand across various sectors. The integration of ESS in AIDC and the strong momentum in global markets present substantial investment opportunities.

Summary of the 2025 China Materials Tour Conference Call Industry Overview - **Industry**: Battery Materials and Energy Storage Systems (ESS) - **Key Company**: ZE Consulting Core Insights 1. **Battery Demand Forecast**: ZE Consulting predicts a significant increase in ESS demand for FY26, estimating a growth of **70-80% YoY**. This is attributed to battery makers revising their output guidance upwards for FY26, indicating a tightening supply-demand dynamic in the battery market [1][2][3] 2. **Battery Price Trends**: Anticipated price hikes in batteries are expected due to: - Tightening supply and demand dynamics for both ESS and electric vehicle (EV) batteries - Inflation in raw material costs that battery manufacturers will need to pass on to consumers [1][3][5] 3. **Production Pipeline**: The production pipeline for December 2025 is expected to remain stable month-over-month. Leading battery manufacturers are stockpiling battery materials in preparation for increased average selling prices (ASP) and for production needs during the Chinese New Year [2][3] 4. **Cost Inflation Impact**: Recent inflation in battery materials has resulted in approximately a **10% increase** in the cost of battery cells. Key materials such as LiPF6, VC, and lithium carbonate have seen significant price increases, with further hikes expected for cathodes and other components [3][5] 5. **Lepidolite Mine Operations**: JXW is projected to resume operations in December 2025, adding around **8,000 tons of lithium carbonate equivalent (LCE)** monthly to the market. However, other lepidolite mines may face operational suspensions similar to CATL's situation during FY26 [4][5] 6. **Price Hikes Sequence**: The sequence of price increases is expected to start with ESS, followed by LiPF6 and cathodes, and then separators and anodes. EV battery prices may also rise due to cost pressures and a shift in production capacity towards ESS [5][8] 7. **Profitability Concerns**: If battery makers increase the ASP of battery cells to offset cost inflation, it could negatively impact the internal rate of return (IRR) for ESS projects. Profitability is at risk if the ASP exceeds **Rmb0.4/wh** [8] Additional Important Points - **Inventory Management**: Leading battery manufacturers are increasing their inventory of battery materials in anticipation of rising prices and production needs [2][3] - **Market Dynamics**: The overall market dynamics indicate a shift towards a more constrained supply environment, which could lead to further price volatility in the battery materials sector [1][5] This summary encapsulates the key insights and projections discussed during the conference call, highlighting the evolving landscape of the battery materials industry and its implications for future investments.

Summary of Key Points from the Conference Call Industry Overview: Energy Storage Systems (ESS) Battery Core Insights and Arguments - **Global ESS Battery Shipments**: In October, global ESS battery shipments increased by 6% month-over-month (m/m) and 70% year-over-year (y/y), with a doubling of demand in the first ten months of 2025 compared to the same period last year, primarily driven by robust exports from China, which saw over 140% y/y growth [2][11][34] - **Domestic Market Performance**: In China, domestic ESS battery shipments surged by 77% y/y and 19% m/m in October, supported by favorable government policies and a rebound in demand following a decline earlier in the year [2][11][34] - **AIDC Demand**: The demand for ESS driven by AI data centers (AIDC) is expected to grow significantly, with forecasts indicating an 85% compound annual growth rate (CAGR) from 2025 to 2030 [11][34] - **Market Dynamics**: Chinese players' shipments to the US dropped by 30% m/m in October due to anticipated tariff changes, yet they experienced a 176% y/y growth in the first ten months of 2025 [11][34] Key Players and Market Share - **Top Picks**: J.P. Morgan identifies CATL-A, Sungrow, and LGES as top picks in the ESS market due to their strong market positions and growth potential [2][11] - **Sungrow**: The largest solar inverter producer globally, with a market share of approximately 30% as of FY24, is expected to benefit from rising ESS demand [11][34] - **CATL**: The largest ESS battery maker globally, with a significant share in the US market, is projected to gain market share in the domestic market post-policy changes [11][34] Regional Demand Insights - **China's Domestic Demand**: The domestic market accounted for 37% of total Chinese ESS battery shipments in the first ten months of 2025, down from approximately 48% in 2024, while the US market accounted for 24% [11][45] - **Export Growth**: ESS battery shipments to the US saw a remarkable increase of 176% y/y, driven by strong demand and rush purchases before tariff hikes [11][45] Price Trends and Production Capacity - **ESS Battery Prices**: Prices have remained largely flat following a 5-10% rebound in mid-2023, indicating stable market conditions despite fluctuations in demand [11][34] - **Production Capacity**: CATL's global ESS market share fell by 9 percentage points in the first ten months of 2025 due to capacity constraints and policy disruptions, although it remains the leader in production volume [11][69] Future Outlook - **Forecast Upgrades**: The US ESS installation forecast for FY26 has been upgraded from a 13% y/y decline to a 13% y/y growth, reflecting increased confidence in market recovery [11][8] - **Strategic Agreements**: HyperStrong signed a ten-year supply agreement with CATL for over 200 GWh of energy storage batteries, indicating strong expectations for future demand [11][7] Additional Insights - **Market Competition**: The competition in the China domestic market is fierce, with CATL holding only about 15% market share, down from 25% in 2024, while the US market sees CATL leading with approximately 47% market share [11][45] - **Utility-Scale Market**: CATL experienced an 11 percentage point decrease in market share in the utility-scale segment, primarily due to competition from BYD and Hithium [11][95] This summary encapsulates the key points discussed in the conference call regarding the ESS battery industry, highlighting growth trends, market dynamics, and future outlooks for key players.

Investment Rating - The report assigns a "Buy" rating for CALB Group Co Ltd with a target price of HK$33.40, indicating an expected share price return of 3.3% [6]. Core Insights - CALB's battery shipment volume guidance for 2025E is set at 110GWh, with expectations to exceed this target based on year-to-date trends and production plans for the last two months of the year. For 2026E, the guidance is 180GWh, comprising 110GWh for EV batteries and 70GWh for ESS batteries [2][3]. - The completed battery capacity is projected to be over 160GWh by the end of 2025 and over 230GWh by the end of 2026, with effective capacities expected to be 130GWh and nearly 200GWh, respectively [2]. - Demand for ESS batteries is strong, with CALB operating at full capacity in 2025. The company anticipates sustained capacity amid shipment bottlenecks and strong demand growth from both existing and new clients in 2026-27E [3]. - Management expects a slight increase in the average selling price (ASP) of ESS batteries due to tight supply, but significant increases are unlikely. Margins in the ESS battery segment are expected to rise in 2026-27E due to increased shipments to overseas markets and higher-margin ESS system shipments [4]. - For EV batteries, effective capacity is expected to reach 85GWh in 2025E and 130GWh in 2026E. Shipment growth for EV batteries is anticipated to remain strong, with improved margins expected as shipments to international OEMs increase [5]. Summary by Sections Battery Shipment - CALB's battery shipment volume guidance for 2025E is 110GWh, with expectations to exceed this target. For 2026E, the guidance is 180GWh, including 110GWh for EV batteries and 70GWh for ESS batteries [2]. Battery Capacity - Completed battery capacity is expected to be over 160GWh in 2025 and over 230GWh in 2026, with effective capacities projected at 130GWh and nearly 200GWh, respectively [2]. ESS Battery - ESS battery demand is strong, with full utilization expected in 2025. Capacity is anticipated to be sustained in 2026 amid strong demand growth [3]. ESS Battery Price and Margin - Management expects a slight increase in ESS battery ASP due to tight supply, with margins expected to rise in 2026-27E due to increased shipments to overseas markets [4]. EV Battery - Effective capacity for EV batteries is projected at 85GWh in 2025E and 130GWh in 2026E, with strong shipment growth and improved margins expected [5].