Power Equipment & New Energy Sector Weekly Report

Date: December 29, 2025
Source: BOC International (China) Co., Ltd.
Analysts: Jiaxiong Wu (S1300523070001), Yang Li (S1300523080002)
Rating: Outperform

Executive Summary

The Power Equipment and New Energy sector demonstrated robust momentum in the fifth week of December 2025, outperforming the broader market indices. The sector index rose by 5.37%, driven primarily by strong performances in Wind Power (+7.14%) and Photovoltaics (+6.56%). This weekly report analyzes the critical structural shifts occurring across the solar, lithium battery, energy storage, and emerging energy sectors.

Our core investment thesis remains anchored in the theme of "Anti-Involution" (Rationalization of Competition) within the photovoltaic (PV) supply chain, coupled with a resurgence in pricing power due to raw material cost pressures (specifically silver) and coordinated industry self-discipline. In the lithium sector, we observe a tightening supply dynamic as major producers initiate maintenance shutdowns ahead of the Lunar New Year, reinforcing price support for lithium carbonate and phosphate materials. Meanwhile, the energy storage sector continues to exhibit high景气度 (prosperity), with system prices stabilizing and even rising slightly due to stricter bidding criteria and upstream cost pass-through.

We maintain an Outperform rating on the sector. Key recommendations include focusing on PV segments with improved competitive landscapes (silicon materials, modules, BC technology, perovskite, and encapsulation films), wind power beneficiaries of international cooperation agreements, and leading energy storage integrators. Emerging themes such as solid-state batteries, green hydrogen, and nuclear fusion supply chains offer long-term catalytic potential.

Key Takeaways

1. Market Performance: Sector Outperformance Led by Wind and Solar

The Power Equipment and New Energy sector significantly outpaced the Shanghai Composite Index (+1.88%) and the Shenzhen Component Index (+3.53%).

• Sector Index Performance: +5.37%
• Sub-sector Breakdown:
  • 🌬️ Wind Power: +7.14% (Top Performer)
  • ☀️ Photovoltaics (PV): +6.56%
  • 🏭 Industrial Automation: +5.85%
  • ⚡ Power Generation Equipment: +4.73%
  • 🚗 New Energy Vehicles (NEV): +4.10%
  • ☢️ Nuclear Power: +3.45%
  • 🔋 Lithium Batteries: +1.37% (Lowest Gain)

Top Gainers: Tianji Shareholding (+48.51%), Do-Fluoride Chemicals (+27.37%), Enjie Shareholding (+25.49%), Zhiguang Electric (+22.41%), Tongguan Copper Foil (+21.94%).
Top Decliners: Zhonghuan Hailu (-7.65%), Taiyang Cable (-7.31%), Hongxiang Shares (-6.38%).

Analyst View: The divergence between Wind/PV strength and Lithium Battery modesty reflects the market’s preference for sectors where supply-side discipline is actively being enforced (PV/Wind policy support) versus those still navigating inventory adjustments and price negotiations (Lithium). However, the recent maintenance announcements in the lithium sector may narrow this performance gap in the coming weeks.

2. Photovoltaics: "Anti-Involution" Takes Shape; Price Transmission Mechanism Activating

The PV sector is undergoing a pivotal transformation from pure capacity expansion to structured consolidation and price rationalization. The overarching investment logic is defined by the industry's concerted effort to curb "involutionary" price wars.

A. Policy and Industry Self-Discipline

• Regulatory Guidance: The State Administration for Market Regulation has initiated compliance guidance on price competition order within the PV industry. This signals top-down support for healthy market practices.
• Industry Consensus: Following the China Photovoltaic Industry Association (CPIA) conference, leading module manufacturers have actively responded to industry self-discipline initiatives. A formal "PV Industry Self-Discipline Initiative" is taking shape, supported by the landing of a polysilicon capacity integration and acquisition platform.
• Impact: These measures are shifting market psychology from passive destocking to active volume control, aiming to restore profitability across the value chain.

B. Supply Chain Price Dynamics

Polysilicon:
* Status: Prices remain stable but transaction volumes are low. Manufacturers are adopting a "wait-and-see" approach, with some major players halting quotes to stabilize expectations.
* Pricing: Dense material prices range from RMB 49-55/kg, with mixed dense material at RMB 47-51/kg. Granular silicon is at RMB 50-51/kg.
* Outlook: While there is consensus to control Q1 2026 production, actual execution remains to be seen. Inventory accumulation poses a risk in the traditional Q1淡季 (off-season), but prices are expected to stabilize as demand picks up towards the end of Q1.

Silicon Wafers:
* Trend: Significant price strengthening observed. Sellers are reluctant to ship, employing volume control strategies amidst expectations of further hikes.
* Pricing:
* 183N: Mainstream transaction price at RMB 1.25/piece (up from ~1.18-1.20). Low-end transactions at RMB 1.23 are disappearing.
* 210RN: Prices rose substantially to RMB 1.35/piece.
* 210N: Stable at RMB 1.55/piece.
* Driver: Rising silver paste costs and industry self-discipline have justified higher wafer quotes. The market has shifted from passive destocking to active supply restriction.

Solar Cells:
* Trend: N-type cell prices continued to rise, driven by soaring silver prices and production cost pressures.
* Pricing: Average prices for 183N, 210RN, and 210N cells reached RMB 0.34/W. Leading manufacturers are quoting above RMB 0.36/W.
* Risk: There is a significant divergence between cell and module pricing. If cell price hikes cannot be fully passed through to modules due to weak terminal demand, January may see large-scale production cuts in the cell segment.

Modules:
* Trend: Module quotes have been raised by RMB 0.02-0.04/W following the CPIA meeting. Distributed channels are seeing increased transactions at RMB 0.68-0.71/W.
* Technology Mix:
* TOPCon: Centralized projects at RMB 0.64-0.70/W; Distributed at RMB 0.66-0.71/W.
* HJT: Average transaction price adjusted to RMB 0.76/W (720-725W modules). High-power modules (730-740W) command a premium of RMB 0.78-0.84/W.
* Outlook: The push for high-power modules is driving market clearing through efficiency gains. Module manufacturers have strong incentives to raise prices, benefiting segments with better competitive landscapes such as encapsulation films and advanced cell technologies (BC, Perovskite).

Auxiliary Materials:
* Silver Paste: Prices surged due to rising silver bullion prices. Front-side main grid silver paste reached RMB 14,945/kg (+6.34% WoW). This cost pressure is a primary driver for cell and module price increases.
* EVA Particles: Prices declined by 3.8% to RMB 9,814/ton, facing mixed demand signals.
* PV Glass: Prices dropped 2.7%-4.3% due to weak terminal demand and rising inventory. Manufacturers are operating at breakeven or slight losses, limiting further downside.

C. International Market Dynamics

• Europe: Prices stable at $0.084-0.088/W. Tax rebate issues (9%) are being incorporated into contracts.
• USA: Southeast Asian imports priced at $0.27-0.28/W. Distribution market prices approaching $0.30/W. The Foreign Entity of Concern (FEOC) rules under the Inflation Reduction Act are impacting supply chain restructuring and compliance requirements, adding complexity but potentially supporting premiums for compliant supply chains.
• Asia/LatAm/Middle East: Prices remain competitive, with India seeing some local oversupply pressure.

3. Lithium Batteries: Supply Tightening via Maintenance; Price Game Intensifies

The lithium sector is entering a phase of intensified price博弈 (game/negotiation), characterized by strategic supply reductions and evolving pricing mechanisms.

A. Strategic Production Cuts & Maintenance

Several leading Lithium Iron Phosphate (LFP) cathode manufacturers have announced planned maintenance and production cuts starting January 1, 2026, lasting approximately one month. This coordinated action is designed to strengthen price support and improve profitability expectations during the traditional Q1 lull.

• Implication: These cuts, totaling potentially over 50,000 tons of reduced output in January, will tighten immediate supply, supporting LFP and lithium carbonate prices.

B. Lithium Material Price Trends

• Lithium Carbonate: Prices continued their upward trajectory.
  • Battery Grade: Spot prices reached RMB 121,000/ton (as of Dec 26 data in Table 2, though text mentions avg ~98k-102k range depending on source/date lag, the trend is sharply up). Note: Table 2 shows Dec 26 price at 12.1 wan/ton, a 19.21% weekly increase.
  • Drivers:
    1. Supply Concerns: Yichun City Natural Resources Bureau announced the cancellation of 27 mining rights, raising concerns about regional supply compliance and release pace.
    2. Project Delays: The Jianxiawo lithium mine project (CATL/Yichun) expects resumption around the Spring Festival, but market perceives a longer timeline for full ramp-up.
    3. Inventory Drawdown: Expectations of inventory depletion in the off-season bolster bullish sentiment.
• Lithium Spodumene: CIF prices rose 17.3% to $1,290/ton. Spot availability is tight as downstream firms lock in long-term contracts, enhancing miners' pricing power.
• Cathode Materials:
  • LFP (Power Type): Rose 15.35% to RMB 45,100/ton.
  • NCM 523: Rose 3.67% to RMB 155,500/ton.
  • NCM 811: Rose 2.69% to RMB 171,500/ton.
• Electrolyte & Additives: Prices remained stable or slightly firm. LiPF6 held at RMB 180,000/ton. VC (Vinylene Carbonate) new capacity coming online (e.g., Lianhong New Materials) may ease additive constraints long-term, but current prices are supported by overall cost inflation.

C. Pricing Mechanism Reform

• Tianqi Lithium: Announced that starting January 1, 2026, spot transaction settlement prices will no longer reference existing standards but will align with Mysteel’s battery-grade lithium salt prices or the Guangzhou Futures Exchange (GFEX) lithium carbonate futures main contract.
• Significance: This move enhances price transparency and links spot markets more closely with futures, potentially reducing arbitrage opportunities and stabilizing long-term contracting frameworks. It reflects a maturing market structure.

D. Solid-State Battery Progress

• Cooperation: CNGR Advanced Material signed a strategic framework agreement with Sunwoda for solid-state battery development. Focus areas include precursor development for solid-state cathodes, positive electrode materials, and industrialization.
• Investment Implication: Accelerating industrialization of solid-state batteries highlights the importance of early-mover advantages in specialized precursors and equipment. Investors should monitor validation progress in related material and equipment firms.

4. Energy Storage: High Prosperity Continues; System Prices Rebound

The energy storage sector maintains high demand景气度, with price dynamics shifting from aggressive bottom-fishing to rational, cost-plus pricing.

A. Price Trends

• Storage Cells: Prices rose due to upstream cost pressures (Lithium Carbonate, LFP, Copper/Aluminum foils).
  • 100Ah LFP Cell: Avg RMB 0.395/Wh (+RMB 0.01/Wh).
  • 280Ah/314Ah LFP Cell: Avg RMB 0.318/Wh (+RMB 0.008/Wh).
• Storage Systems: Bid prices in China have rebounded.
  • DC Side Liquid Cooling (2h): Avg RMB 0.45/Wh.
  • AC Side Liquid Cooling (2h): Avg RMB 0.52/Wh.
  • AC Side Liquid Cooling (4h): Avg RMB 0.48/Wh.
• Premium for Grid-Forming: Grid-forming storage projects command a premium of RMB 0.10-0.20/Wh over grid-following projects, reflecting higher technical value.

B. Market Structure & Policy Support

• Bidding Quality Improvement: End-of-year tenders show higher entry barriers. Criteria now emphasize "actual operational performance," "dispatch records," and "grid compliance" rather than just lowest price. Strict warranty and availability clauses compress the space for low-quality, low-price competition.
• Policy Anchor: The 2026 National Energy Work Conference emphasized "enhancing system flexible regulation capabilities," cementing the role of new energy storage in power supply security and renewable integration.
• Anti-Involution Policy: The Central Economic Work Conference’s directive to rectify "involutionary competition" is expected to target the battery and system integration segments, pushing prices towards a "Cost + Reasonable Profit" model.

C. Corporate Developments

• Sieyuan Electric & CATL: Signed a three-year memorandum of cooperation for energy storage, targeting 50GWh. This underscores the trend of deep binding between equipment integrators and core cell suppliers.

5. Wind Power: International Cooperation Drives Long-Term Demand

• Policy Catalyst: Premier Li Qiang stated China’s willingness to work with SCO (Shanghai Cooperation Organization) members to advance "10 GW of new PV" and "10 GW of new Wind Power" projects over the next five years.
• Implication: This provides a clear visibility pipeline for wind power exports and international EPC projects.
• Recommendation: Focus on wind turbine manufacturers and offshore wind supply chains that are well-positioned for international expansion. The sector’s strong weekly performance (+7.14%) reflects optimism regarding these overseas growth avenues.

6. Emerging Technologies: Hydrogen & Nuclear Fusion

• Green Hydrogen:
  • Logic: Electricity substitution is opening up green hydrogen demand. Green hydrogen coupling with coal chemicals and green methanol is in the early introduction phase.
  • Trend: The "Green Power - Green Hydrogen - Green Fuel" industrial chain is being rationalized. In the early stages, green fuels may enjoy a premium.
  • Focus: Hydrogen equipment manufacturers and green fuel operators. Monitor the penetration rate of downstream hydrogen-based energy applications.
• Nuclear Fusion:
  • Logic: Represents the future direction of energy development with long-term catalytic potential.
  • Focus: Core suppliers in the nuclear fusion power supply chain. While commercialization is distant, R&D breakthroughs can drive thematic investment opportunities.

Risks / Headwinds

Investors must carefully weigh the following risks, which could materially impact the sector’s performance and valuation multiples:

1. Excessive Price Competition

Despite "anti-involution" efforts, the mid-stream manufacturing chains for PV and power batteries still face overcapacity concerns.
* PV: If industry self-discipline fails to hold, module and cell prices could revert to cash-cost levels, eroding margins for all but the most efficient producers.
* Batteries: Continued price wars in EV batteries could suppress profitability for cell makers and material suppliers.
* Power Equipment: Bidding prices for grid equipment and new energy stations may remain under pressure if utility CAPEX budgets are constrained.

2. International Trade Frictions

Export markets are critical for Chinese PV, Lithium, and Wind component manufacturers.
* Tariffs & Barriers: Escalation of trade frictions (e.g., EU anti-subsidy investigations, US FEOC rules, India’s ALMM list) could restrict market access or impose punitive tariffs.
* Supply Chain Decoupling: Requirements for local content or non-Chinese supply chains could force costly restructuring or lead to loss of market share in key regions like North America and Europe.

3. Slower-than-Expected Investment Growth

• Grid & Power Investment: The demand for power equipment and new energy generation is directly tied to grid and power source investment增速 (growth rates). Any slowdown in state-owned enterprise CAPEX or private investment in renewables would negatively impact order books.
• NEV Sales: While Q4 is traditionally strong, any macroeconomic slowdown affecting consumer discretionary spending could dampen NEV sales growth, thereby reducing battery demand.

4. Policy Misses or Delays

• Sensitivity: The NEV, Renewable Energy, and Hydrogen sectors are highly policy-dependent.
• Risk: Failure to meet subsidy targets, delays in grid connection approvals, or weaker-than-expected implementation of "anti-involution" policies could undermine the fundamental recovery thesis.

5. Raw Material Price Volatility

• Cost Push: Most companies in the sector are manufacturing-intensive with high raw material cost ratios.
• Specific Risks:
  • Lithium: Sharp fluctuations in lithium carbonate prices create inventory valuation risks and margin uncertainty for battery makers.
  • Silver: Rapidly rising silver prices (as seen recently) squeeze margins for PV cell and module makers if not fully passed through.
  • Polysilicon/Metals: Volatility in industrial silicon, copper, and aluminum prices impacts downstream profitability.

6. Technology Iteration Risk

• Disruption: Rapid technological changes in Lithium (e.g., Solid-State vs. Liquid), PV (e.g., TOPCon vs. HJT vs. BC vs. Perovskite), and Hydrogen pathways carry execution risk.
• Obsolescence: Companies heavily invested in legacy technologies (e.g., PERC in PV, standard LFP without cost advantages) face the risk of asset stranding and margin compression if next-gen technologies achieve commercial breakthroughs faster than anticipated.

Rating / Sector Outlook

Overall Sector Rating: Outperform (Stronger than Big Market)

We maintain our Outperform rating on the Power Equipment and New Energy sector. The combination of policy-driven supply side discipline, stabilizing raw material costs (or cost-push pricing power), and robust long-term demand fundamentals supports a constructive outlook.

Sub-Sector Outlooks & Recommendations

Investment View

1. Core Investment Logic: The "Rationalization" Supercycle

The most significant shift in the Power Equipment sector is the transition from Capacity Expansion to Quality and Profitability Restoration. For the past two years, the market has been plagued by "involution"—destructive price competition driven by excess capacity. The events of late 2025 signal a turning point:

1. Policy Backstop: Government guidance on "orderly competition" and the CPIA’s self-discipline initiatives provide a regulatory floor for prices.
2. Corporate Discipline: Major players in PV (silicon/wafers) and Lithium (cathodes) are actively cutting production or maintaining strict volume control to defend margins. This is a mature industry behavior, signaling that the "growth at all costs" phase is ending.
3. Cost-Push Inflation as a Catalyst: Paradoxically, rising input costs (Silver for PV, Lithium for Batteries) are helping to break the deflationary spiral. They force price hikes that were previously impossible due to competitive fears. Companies that can pass these costs through (due to brand power or technology differentiation) will see margin expansion.

Investment Implication: Favor companies with pricing power, technological moats (BC, HJT, Solid-State), and strong balance sheets that can survive the consolidation phase. Avoid pure-play capacity expanders with high debt and undifferentiated products.

2. Photovoltaics: Selectivity is Key

While the PV sector is rising, it is not a uniform tide. The "Anti-Involution" narrative benefits different segments differently.

• Winners:
  • Module Makers with Tech Leadership: Companies like LONGi Green Energy (partnering with Solarpro in Europe for BC plants) are demonstrating that technology differentiation (BC vs. standard TOPCon) allows for premium pricing and market access. High-power modules (730W+) are becoming the new standard, favoring those with advanced packaging and cell efficiency.
  • Silicon Material Leaders: With the polysilicon acquisition platform landing, larger, integrated players will gain market share. Their ability to control output and stabilize prices will restore profitability.
  • Encapsulation Films (POE/EVA): As module power increases, the requirement for high-performance encapsulation grows. This segment has a relatively good competitive landscape.
• Watch List:
  • Cell Makers: They are currently squeezed between rising silver costs and resistant module buyers. Watch for January production cuts. If cuts are deep, cell prices may stabilize, but margins could remain thin until module prices fully adjust.
  • Glass & Auxiliaries: Currently suffering from oversupply. Only the lowest-cost producers will survive. Wait for clearer signs of demand recovery before overweighting.

3. Lithium Batteries: The "Maintenance Put" and Solid-State Optionality

The lithium sector is playing a game of chicken with demand. The Q4 sales surge provides a temporary demand boost, but the real story is supply management.

• Short-Term Play: The coordinated maintenance by Hunan Yuneng, Wanrun, and Defang Nano in January acts as a "put option" on lithium prices. It prevents a catastrophic price collapse during the Q1 seasonal slump. This supports the stock prices of LFP cathode makers in the near term.
• Pricing Reform: Tianqi Lithium’s move to link spot prices to futures/Mysteel indices reduces opacity. This benefits large, transparent players and may reduce volatility long-term, making the sector more investable for institutional capital.
• Long-Term Alpha: Solid-State Batteries. The partnership between CNGR and Sunwoda is a tangible step towards commercialization. Investors should look for companies involved in:
  • Solid Electrolytes: Sulfide or oxide pathway developers.
  • Specialized Precursors: High-nickel or silicon-anode precursors required for solid-state cells.
  • Equipment: Dry electrode coating machinery.

4. Energy Storage: From "Price War" to "Value War"

The energy storage sector is maturing. The days of winning bids solely on the lowest price are ending.

• Quality Premium: The shift in bidding criteria towards "operational performance" and "grid compliance" favors established integrators with proven track records. Sieyuan Electric’s 50GWh deal with CATL is a prime example of this trend—utilities want reliability, not just cheap hardware.
• Grid-Forming Tech: The premium for grid-forming storage (RMB 0.10-0.20/Wh) highlights the value of software and control algorithms. Companies that integrate advanced PCS (Power Conversion Systems) and EMS (Energy Management Systems) will capture more value than pure box-builders.
• Global Demand: Overseas markets (Europe, US, Middle East) continue to drive high-margin demand. Companies with strong international distribution and service networks will outperform domestic-only players.

5. Wind Power: The Export Alpha

Wind power has been a laggard compared to PV and Batteries, but the SCO 10GW initiative changes the narrative.

• International EPC: Chinese wind turbine manufacturers are globally competitive on cost and technology. The SCO agreement provides a sovereign-backed pipeline for projects in Central Asia and beyond. This reduces reliance on the saturated domestic market.
• Offshore Wind: Domestic offshore wind installations are accelerating as coastal provinces meet renewable targets. Supply chain bottlenecks (cables, foundations) are easing, allowing for volume growth.

6. Emerging Themes: Hydrogen and Fusion

These are long-duration options, not core holdings for most portfolios, but they offer high-beta exposure to energy transition narratives.

• Green Hydrogen: The key is application. Look for projects where green hydrogen is coupled with existing industrial processes (coal-to-chemicals, methanol production). This creates immediate, tangible demand rather than speculative fuel cell vehicle adoption.
• Nuclear Fusion: Still in the R&D phase. Investment here is purely thematic, driven by scientific breakthroughs (e.g., net energy gain experiments). Focus on niche suppliers of high-voltage power supplies and superconducting magnets.

Detailed Financial & Operational Analysis of Key Mentioned Companies

(Note: Valuation data as of Dec 26, 2025. EPS estimates from iFinD consensus where no rating is provided.)

1. Lianhong New Materials (003022.SZ)

• Rating: Overweight (Buy)
• Price: RMB 19.84 | Market Cap: RMB 26.5B
• Valuation: 2024E P/E 113x | 2025E P/E 82.7x
• Key Development: Subsidiary’s 4,000 ton/year VC (Vinylene Carbonate) plant successfully commenced production.
• Analysis: VC is a critical electrolyte additive. With the EV battery market growing, demand for high-purity additives remains robust. Lianhong’s vertical integration into battery materials diversifies its revenue base beyond its traditional polymer business. The high P/E reflects growth expectations from this new capacity. Monitor utilization rates and margin contribution from the VC plant in Q1 2026.

2. CNGR Advanced Material (300919.SZ)

• Rating: Not Rated
• Price: RMB 45.55 | Market Cap: RMB 45.7B
• Valuation: 2024E P/E 29.1x | 2025E P/E 26.5x
• Key Development: Strategic agreement with Sunwoda on Solid-State Batteries.
• Analysis: CNGR is a global leader in precursor materials. The solid-state partnership validates its R&D capabilities and positions it at the forefront of the next battery revolution. The reasonable valuation (mid-20s P/E) offers a good entry point for investors seeking exposure to solid-state tech without the extreme volatility of smaller pure-plays. Expect incremental revenue from solid-state precursors to be small in 2026 but significant for sentiment.

3. Hunan Yuneng (301358.SZ)

• Rating: Not Rated
• Price: RMB 70.92 | Market Cap: RMB 54.0B
• Valuation: 2024E P/E 90.5x | 2025E P/E 44.6x
• Key Development: Jan 2026 maintenance cut (15k-35k tons).
• Analysis: Yuneng is a dominant LFP cathode supplier. The planned maintenance is a strategic move to support prices. Given its scale, even a small reduction in output can impact market balance. The drop in forward P/E from 90x to 44x suggests expected earnings recovery in 2025, likely driven by volume growth and stabilized margins. The stock is sensitive to lithium carbonate prices; a stable/rising Li price environment benefits its inventory valuation and pricing power.

4. Wanrun New Energy (688275.SH)

• Rating: Not Rated
• Price: RMB 82.00 | Market Cap: RMB 10.3B
• Valuation: Loss-making (2024E EPS -6.90; 2025E EPS -2.41)
• Key Development: Jan 2026 maintenance cut (5k-20k tons).
• Analysis: Wanrun has faced profitability challenges, reflected in negative EPS estimates. The maintenance cut is crucial for stopping cash bleed and supporting market prices. Investment here is speculative, betting on a turnaround in LFP margins and successful cost restructuring. High risk, high potential reward if the sector cycle turns decisively.

5. Defang Nano (300769.SZ)

• Rating: Not Rated
• Price: RMB 46.19 | Market Cap: RMB 12.9B
• Valuation: Loss-making (2024E EPS -4.77; 2025E EPS -1.64)
• Key Development: Jan 2026 maintenance and tech upgrade.
• Analysis: Similar to Wanrun, Defang is navigating a difficult profit environment. The "tech upgrade" component of its maintenance suggests an effort to improve efficiency or shift to higher-margin products (e.g., manganese iron phosphate). Monitor the success of its new product launches and cost reduction initiatives.

6. Shida Shenghua (603026.SH)

• Rating: Not Rated
• Price: RMB 82.47 | Market Cap: RMB 19.2B
• Key Development: Planning H-share listing in Hong Kong.
• Analysis: The H-share listing aims to raise capital for international expansion and debt reduction. As a leading solvent supplier for batteries, global expansion is key to maintaining growth. The dual-listing could enhance liquidity and visibility among international investors.

7. Longpan Technology (603906.SH)

• Rating: Not Rated
• Price: RMB 21.50 | Market Cap: RMB 13.7B
• Key Development: Phase 1 (25k tons) and Phase 2 (62.5k tons) LFP projects completed. Phase 3 expanded to 100k tons.
• Analysis: Longpan is aggressively expanding its LFP capacity. Completion of Phases 1 and 2 means revenue recognition should accelerate in 2026. However, in an oversupplied market, volume growth must be matched with cost competitiveness. The expansion of Phase 3 signals confidence, but also adds execution risk. Watch for customer off-take agreements for the new capacity.

Strategic Allocation Recommendations for Institutional Investors

Core Holdings (High Conviction, Lower Risk)

• Leading PV Module Makers with BC/HJT Tech: Beneficiaries of the "high-power" trend and international brand premium.
• Top-Tier Energy Storage Integrators: Companies with strong grid-connection records and overseas presence (e.g., partners of CATL, Sieyuan).
• Wind Power OEMs with Export Exposure: Beneficiaries of the SCO 10GW initiative and global wind revival.

Satellite Holdings (Medium Conviction, Cyclical Play)

• LFP Cathode Leaders (Yuneng, etc.): Play on the Q1 supply tightening and price stabilization.
• Polysilicon/Silicon Wafer Leaders: Play on industry consolidation and "anti-involution" success.
• Lithium Miners with Low Cost: Beneficiaries of stable/rising lithium prices, provided they have compliant reserves (mitigating Yichun policy risk).

Thematic/Speculative (High Risk, High Reward)

• Solid-State Battery Supply Chain: CNGR, Sunwoda partners, specialized equipment makers.
• Green Hydrogen Equipment: Early-stage growth, dependent on policy subsidies and industrial coupling projects.
• Nuclear Fusion Suppliers: Purely thematic, driven by news flow and R&D milestones.

Avoid/Underweight

• Non-Differentiated PV Auxiliary Manufacturers: Glass, frame, and standard EVA film makers facing severe oversupply and weak pricing power.
• High-Cost Lithium Producers: Those with marginal assets that may be shut down or face regulatory scrutiny (e.g., non-compliant mines in Yichun).
• Pure-Play Legacy Battery Makers: Companies without solid-state roadmap or significant cost disadvantages in LFP/NCM production.

Conclusion

The Power Equipment and New Energy sector is at an inflection point. The destructive "involution" of the past two years is being replaced by a more disciplined, policy-supported market structure. While challenges remain—particularly in terms of global trade friction and technological disruption—the immediate outlook is positive due to:
1. Supply Side Discipline: Maintenance cuts in Lithium and production controls in PV.
2. Cost-Push Pricing: Silver and Lithium price rises forcing necessary price corrections.
3. Policy Support: Domestic "anti-involution" directives and international cooperation agreements (SCO).

Institutional investors should pivot from broad beta exposure to alpha selection, focusing on companies with technological leadership, cost advantages, and international market access. The "Anti-Involution" theme is not just a slogan; it is a tangible driver of margin restoration and valuation rerating in 2026.

Disclaimer:
This report is prepared by BOC International (China) Co., Ltd. for institutional clients only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities. The information contained herein is based on sources believed to be reliable, but no representation or warranty, express or implied, is made as to its accuracy or completeness. The opinions expressed are subject to change without notice. Investors should conduct their own independent research and consult with their financial advisors before making any investment decisions. Past performance is not indicative of future results.