In March, the shipment volume of power batteries is expected to grow strongly, Goldman Sachs: Battery sales are "strongly correlated" with stock prices

Goldman Sachs analysts Eric Shen and Qiying Wei stated in their latest research report that, according to lCCSino data, the shipment volume of China's power battery industry is expected to exceed market expectations in March, with a month-on-month growth of 15%, which will be a positive indicator for battery demand prospects in 2025.

The analysts pointed out that this strong monthly growth expectation further solidifies their judgment on the cyclical recovery of the industry, and it will also serve as a potential catalyst for driving the stock prices of related listed companies, bringing them opportunities for performance growth and valuation enhancement.

Battery Shipment Volume "Surges," Who Are the Biggest Winners?

It is worth noting that due to the Lunar New Year holiday, January and February are usually off-peak months for battery shipments, so the unexpectedly strong growth expectation in March is even more uplifting for the market. Goldman Sachs' report noted that since 2024, the shipment volume has shown a high correlation with the stock price performance of companies such as CATL and Yuneng New Energy.

Based on this judgment, Goldman Sachs maintains a "Buy" rating on CATL and Yuneng New Energy, giving them target prices of 378 yuan and 66.6 yuan, respectively. Today, CATL closed at 273.53 yuan per share, which is 38% higher than the current price.

The report pointed out that CATL is "the world's largest and most innovative battery manufacturer," with a global market share of 40% in 2023, and will benefit from the global electrification trend:

"CATL is expected to achieve a 25% compound annual growth rate (CAGR) in EPS from 2024 to 2030, driven by a 21% CAGR in sales volume and an expansion of unit gross profit, increasing from 193 yuan/kWh in 2024 to about 200 yuan/kWh in 2026."

Yuneng New Energy is expected to have a global market share of about 34% in 2024, and analysts believe that the company will be a major beneficiary of the upcoming upcycle in LFP cathode materials. Goldman Sachs expects Yuneng New Energy to achieve an approximately 187% CAGR in EPS from 2024 to 2026, with unit gross profit expanding from 2,400 yuan/ton in 2024 to 6,000 yuan/ton in 2026.

Significant Recovery in Demand for Lithium Iron Phosphate Battery Materials, Prices on the Rise

The report also specifically focused on the supply and demand situation in the upstream materials market, where the supply tightness of lithium iron phosphate (LFP) cathode materials is particularly prominent. Data shows that the capacity utilization rate in this field is expected to rise to about 93% in March 2025, a significant rebound from 81% in February, approaching the peak level of 2024.

This means that demand for LFP batteries is continuously growing, whether for energy storage systems (BESS) or new energy vehicles (NEV). LFP batteries, with their excellent cost advantages, are gradually alleviating market concerns about the potential cancellation of mandatory requirements for energy storage systems. Analysts expect:

"Under the continued tight supply and demand conditions, the price of LFP cathode materials is rising, and the upward cycle from 2024 to 2026 will gradually become apparent from a fundamental perspective."