2025-10-15 03:14Summary of Key Takeaways from ZE Conference on Battery Value Chain Industry Overview - Industry Focus: Battery materials, specifically related to Energy Storage Systems (ESS) and Electric Vehicle (EV) batteries - Key Participants: ZE Consulting, China Futures, and various industry contacts Core Insights - ESS Demand Growth: - Industry consensus indicates a rising demand for ESS batteries to compensate for slowing EV battery demand in 2026 - Demand growth forecasts for 2026 vary significantly among experts, ranging from 18% YoY (China Futures) to 40% YoY (ZE) [1][2] - ZE predicts global ESS production will reach 1000 GWh in 2026, up from 600 GWh in 2025, representing a 60%+ YoY growth [1][2] - Lithium Carbonate Demand: - If ZE's forecast holds, it implies an incremental demand of 500 kt+ for lithium carbonate, potentially leading to a quicker turnaround in lithium supply-demand dynamics [2] - Experts see limited downside risk for lithium average selling prices (ASP), although policy uncertainties regarding mining licenses may introduce volatility [2] - LFP Cathode Utilization: - Expected increase in utilization rates for LFP cathodes by 8 percentage points YoY in 2026, with a range of 70%-80% [3] - Current loss-making status among LFP cathode manufacturers is deemed unsustainable, with potential for a deficit in 2027 if demand growth continues to outpace supply [5] Investment Implications - Positive Outlook: The overall positive sentiment from the ZE Conference aligns with a bullish outlook on the upcoming battery price up-cycle [6] - Investment Recommendations: - Continued support for companies such as CATL, EVE, CALB, and Hunan Yuneng is suggested based on strong demand forecasts and production pipelines [6] Risks to Consider - Key Risks: - Weaker-than-expected battery demand - Research and development challenges - Strong competition and operational execution issues - Customer concentration and litigation risks [8][10][14][16] Company Valuations - CALB Group Co Ltd: Target price set at HK$33.40, based on a 2026E P/E of 20.6x [7] - CATL: Valued at HK$621/share based on a 17.3x 2025E EV/EBITDA [9][11] - Eve Energy: Target price of Rmb93.9/share, using a sum-of-the-parts approach [12] - Hunan Yuneng: Valued at Rmb57.9/share based on a 14.4x 2026E EV/EBITDA [15] Conclusion - The battery materials industry is poised for significant growth, particularly in the ESS segment, with varying demand forecasts indicating a robust market. However, potential risks and challenges remain that could impact the overall outlook and company valuations.