China Battery Materials_ Takeaways from Battery Expert Call with ICCSINO

Summary of Key Points from the Conference Call on China Battery Materials Industry Overview - The conference call focused on the lithium-ion battery market, specifically insights from Mr. Zhang Jinhui, Chief Analyst of ICCSINO, regarding the future demand and production of batteries in the electric vehicle (xEV) sector [10][12]. Core Insights - Global Battery Demand: ICCSINO projects a global battery demand increase of 18-20% year-over-year (YoY) in 2025, with energy storage system (ESS) battery demand expected to rise approximately 30% YoY [12]. - xEV Production Volume: The expected global production volume for xEVs in 2025 is between 19.9 million and 20.0 million units, with China accounting for about 14.5 million units [10][12]. - xEV Penetration Rate: The penetration rate of xEVs in China is anticipated to increase to 53-55% in 2025, up from 46-47% in 2024, with further growth expected to exceed 70% by 2028 [12]. Battery Technology Insights - LFP vs NCM Batteries: Demand for lithium iron phosphate (LFP) batteries is expected to grow at a higher rate than nickel cobalt manganese (NCM) batteries, driven by strong ESS demand. Some high-end new energy vehicle (NEV) models are opting for both battery types due to LFP's superior rate performance [13]. - Solid-State Batteries: ICCSINO anticipates that several NEV models featuring semi-solid state batteries will be available by 2025-2026, with all-solid-state batteries expected to emerge post-2027 [14]. Production and Supply Chain Dynamics - Production Pipeline: November 2024 is projected to be the peak month for battery production in 2024, with a potential 10% month-over-month decrease in December as producers destock [10]. - Processing Fees: ICCSINO believes that processing fees for battery materials are unlikely to see significant increases in 2025 due to surplus supply [17]. - Utilization Ratio: A slight increase in the utilization ratio across the battery supply chain is expected in 2025, although profitability may remain low [17]. Company-Specific Insights - CATL Valuation: CATL is valued at RMB 362 per share based on a 17.0x 2024E EV/EBITDA multiple, with a target price implying a 30.8x 2024E P/E and 23.7x 2025E P/E [20]. - Risks for CATL: Potential risks include lower-than-expected EV demand, increased competition in the EV battery market, and higher raw material costs [20]. - Shenzhen Kedali Valuation: Shenzhen Kedali is valued at RMB 92.03 per share based on a 15x 2025E P/E multiple, reflecting overall low sentiment in the battery sector [20]. - Risks for Shenzhen Kedali: Risks include slower-than-expected battery demand, intensified competition leading to price wars, and rising raw material costs such as aluminum and copper [20]. Additional Considerations - The analysis indicates that the industry is currently at a trough in the battery cycle, suggesting potential for recovery and growth in the coming years [10]. - The insights provided by ICCSINO highlight the evolving landscape of battery technology and market dynamics, which are critical for investors to consider when evaluating opportunities in the battery materials sector [10][12][14].