Shen Wan Hongyuan: First “buy” rating given to China Airlines (03931) to welcome the boom saving cycle

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the first coverage gave China Innovation Airlines (03931) a “buy” rating. Demand in the industry is booming, and profits can be expected after the company moves storage volume. Currently, commercial vehicles on the downstream power side of lithium batteries are accelerating the penetration of new energy sources, and the energy storage side has ushered in a period of explosion in the construction of affordable optical storage. As a leading company in the lithium battery industry, the company is expected to fully benefit from the technological premium of cell product iterations while continuously increasing its share of the industry. Currently, the company continues to develop new models for new customers in the power field. Energy storage cells and energy storage systems are expanding overseas markets at an accelerated pace. The scale effect is expected to gradually become apparent after future shipments of dynamic batteries.

Shen Wan Hongyuan's main views are as follows:

Strategic focus has achieved remarkable results, and multi-dimensional breakthroughs have helped leapfrog development

The company went through many rounds of strategic upgrades, strategic restructuring into lithium batteries, focusing on the transformation of three-yuan batteries for passenger cars, and accelerated internationalization after the Hong Kong stock listing, and completed the leap from industry participant to global competitor. The mixed ownership structure and stable professional executive team provided solid support, domestic and foreign industrial bases were gradually implemented, and a full-scenario product system covering power and energy storage was built. Power batteries cover high-end products such as 5C overcharge and high energy density, leading the development of high-capacity cells and energy storage systems in energy storage batteries. In 1H25, the company's revenue was 16.4 billion yuan, +31.7% year-on-year; net profit to mother was 470 million yuan, net interest rate to mother was 2.8%, and the profit level gradually increased.

Demand for mobile storage exploded on both fronts, and industry pattern optimization began a profit improvement cycle

The downstream NEV market continues to expand. 1-3Q25, China's NEV sales volume reached 11.2 million units, and the NEV penetration rate climbed to 46%. The electrification of commercial vehicles became an important increase, compounded by the increase in the charging capacity of bicycles, which strongly supported the demand for power batteries. The energy storage market continues to be booming, and the scale of domestic tenders and tenders is growing steadily, and investors are diverse. The bank expects global energy storage battery shipments to jump from 530 GWh in 2025 to 1,343 GWh in 2028. Competition in the lithium battery industry shows a trend of concentration of leaders and second-tier rise. The company's market share is steadily increasing, compounding that the lithium battery industry has entered a cycle of improving supply and demand, opening up new space for corporate profit improvement.

Core barriers are gradually being consolidated, making every effort to build a global battery core brand

Due to the high increase in the company's mobile storage shipments, the share of industry support increased steadily, and the customer structure was continuously optimized. The dependence of the top five customers fell from 71% in 2023 to 55% in 2024. Customers covered international car companies, energy storage companies and partners in emerging fields, and core customer cooperation was upgraded to a deep strategic binding model. Production capacity at multiple domestic bases has increased in a stepwise manner, overseas bases in Portugal and Thailand have progressed in an orderly manner, and a global production capacity network has gradually taken shape. Furthermore, the company's scale effect and fine management drive cost optimization, high-end product matrices and technological innovation build premium capabilities, leading the layout of cutting-edge technologies such as 430 Wh/kg all-solid-state batteries, and the forward-looking layout and global competitiveness continue to increase.

Risk Alerts

The risk of a sharp rise in raw material prices; the risk of a sharp drop in product prices due to increased competition in the industry; the risk of overseas trade protection policies.