China’s power battery industry performance in March is set to beat market expectations, with shipments projected to rise by 15% month-on-month, which would be a positive indicator for battery demand prospects in 2025, Goldman Sachs analysts Eric Shen and Qiying Wei said in their latest research report, citing data from ICCSino.
The analysts highlighted that this robust monthly growth further strengthens their view of a cyclical recovery in the industry and it could also serve as a potential catalyst for the stock price performance of related listed companies, offering opportunities for earnings growth and valuation upgrades.
Battery Shipments Surge — Who Are the Biggest Winners?
Notably, January and February are typically low seasons for battery shipments due to the Lunar New Year holiday, and therefore, the unexpectedly strong growth forecast for March is even more encouraging for the market, they said, adding that since 2024, battery shipments have shown a high correlation with the stock performance of companies such as CATL and Hunan Yuneng.
Based on the assessment, Goldman maintained its “Buy” rating on CATL and Yuneng, setting target prices of 378 yuan and 66.6 yuan, respectively. On Monday, CATL closed at 273.53 yuan per share, implying a 38% upside.
The report described CATL as the “largest and most innovative battery manufacturer globally”, holding a 40% market share in 2023 and positioned to benefit from the global electrification trend:
CATL is expected to achieve a 25% CAGR in EPS from 2024 to 2030, driven by a 21% CAGR in sales volume and expanding unit gross profit, rising from 193 yuan/kWh in 2024 to around 200 yuan/kWh in 2026, the bank estimated.
Meanwhile, Yuneng holds an estimated 34% global market share in 2024 and the analysts believe the company will be a key beneficiary of the upcoming upcycle in LFP cathode materials.
Goldman forecasts Yuneng’s EPS to grow at a CAGR of approximately 187% from 2024 to 2026, with unit gross profit expanding from 2,400 yuan/ton in 2024 to 6,000 yuan/ton in 2026.
LFP Cathode Demand Surges, Prices Set to Rise
The report also focused on upstream material supply and demand conditions, particularly highlighting the tight supply of lithium iron phosphate (LFP) cathode materials, saying that the capacity utilization rate in this segment is expected to rise to around 93% in March 2025, up significantly from 81% in February and approaching the peak season levels of 2024.
This trend indicates that demand for LFP batteries — both for energy storage systems (BESS) and new energy vehicles (NEV) — continues to rise, and tith its cost advantages, LFP batteries are increasingly easing concerns over the possible cancellation of mandatory energy storage requirements, the bank notes.
Under continued supply tightness, rising LFP cathode prices and the upcycle from 2024 to 2026 will gradually materialize from a fundamental perspective, it added.