2026-01-09 05:13Summary of Conference Call Notes Industry Overview - The focus is on the Battery and Battery Components industry in China. - The report discusses the performance and outlook of two companies: Tinci and Shenzhen Senior. Key Points on Tinci - Downgrade: Tinci's stock rating has been downgraded from Overweight to Equal-weight due to high expectations already priced in and unattractive valuations [1][2] - Earnings Performance: Tinci has realized a LiPF6 price of over Rmb100,000/t and an electrolyte unit net profit of Rmb4,000/t in 4Q25. This indicates a payback period of less than a year, suggesting that further upside may not be sustainable [3][9] - Valuation Adjustment: The stock is now valued using a 20x 2026e P/E multiple, leading to a new price target of Rmb49. The previous valuation was based on long-term profit estimates rather than actual profit [3][10] - Market Position: Tinci is positioned to benefit from a demand boom due to a favorable competitive landscape, but the sustainability of high prices is questioned as the top three LiPF6 producers have significant capacities ready to start [9][10] - Earnings Forecasts: The earnings forecasts for 2025/26/27 have been raised, reflecting the higher LiPF6 price estimates [10] Key Points on Shenzhen Senior - Downgrade: Shenzhen Senior's stock rating has also been downgraded from Overweight to Equal-weight as its sales volume guidance for 2026 is below industry averages [1][4] - Sales Volume Guidance: The company expects a 30% YoY sales volume growth in 2026, which is lower than the 35-40% expected by peers. This is attributed to a higher overseas customer mix and a potential shift from dry to wet separators by some battery producers [4][35] - Earnings Forecasts: The earnings forecasts for 2025/26/27 remain unchanged, based on a reasonable long-term ROIC of 15% for separator makers, with a maintained price target of Rmb16 [4][36] Additional Insights - Market Dynamics: The ongoing price negotiations between battery makers and battery material makers are highlighted, indicating a competitive environment [2] - Capacity Concerns: The report notes that Tinci and its competitors have ready-to-start capacities that could significantly impact market prices and profitability [3][9] - Long-term Outlook: Both companies are expected to face challenges in sustaining high profit levels due to market saturation and competitive pressures [3][4][9] Conclusion - The downgrades for both Tinci and Shenzhen Senior reflect a cautious outlook on their stock valuations amid high expectations and competitive market dynamics. The focus on earnings performance and market positioning will be critical for future assessments in the battery components industry.