Guosen Securities has released a research report highlighting that robust energy storage demand in the third quarter, combined with the onset of the peak season for domestic new energy vehicles, is driving a rapid sequential uptick in supply chain shipments. Cost-side momentum is expected to positively transmit through the chain, supporting a steady improvement in profitability. The firm recommends focusing on opportunities in the lithium battery segment where margins are elevated, particularly for leaders pursuing vertical integration.
Demand for AIDC power equipment is shifting towards DC high-voltage solutions, opening a significant window for more domestic manufacturers to overtake global rivals and enter the worldwide AIDC supply chain. Meanwhile, residential and commercial energy storage markets are seeing sustained growth across various overseas regions. In the wind power sector, the industry inflection point is trending upward, with a spotlight on leaders in turbine manufacturing, key components, and offshore wind development.
Why lithium battery firms saw a rapid Q2 shipment surge? Most players posted robust profit growth as energy storage demand stayed strong and exports of domestic NEVs remained vigorous. In the second quarter, shipment growth rates for dynamic and storage battery companies generally exceeded 50% year-on-year, with sequential gains of 20%-30%, while per-unit net profits in batteries held a steady-to-improving trend. On the materials side, lithium iron phosphate operational profitability remained solid and ternary cathode margins improved; anode profits came under slight pressure from raw material price swings; separators ran at full capacity with rising profitability; and lithium hexafluorophosphate saw marginal profit weakening due to price volatility. Looking into the third quarter, sustained storage demand and the NEV peak season are likely to keep shipments climbing sequentially, with cost pass-through potentially underpinning profitability. The report suggests keeping an eye on leading firms in batteries, separators, copper foil, solid-state batteries, and sodium-ion batteries.
Global storage demand continues to climb steadily, with system and PCS exports accelerating. Domestic market-driven storage orders are exploding, while US data center expansion is lifting demand for large-scale storage procurements. Rising European natural gas prices and power market liberalisation are also fueling storage demand, and emerging markets are rolling out frequent government storage policies. Projections peg global storage installation demand at 455GWh in 2026, a year-on-year increase of 40%.
Domestic wind power demand is inching towards recovery, with exports set to sustain long-term performance gains. Recent stabilization and uptick in China's new-energy feed-in tariffs have spurred a rebound in wind installations and tenders. For offshore wind, the 15th Five-Year Plan for renewable energy has been released, targeting 100GW of new construction starts and cumulative installed capacity reaching 100GW, framing a clear long-term trajectory. While European offshore wind tenders saw delays earlier this year, the UK is expected to complete its AR8 auction before year-end, potentially pulling overseas demand out of its trough. Wind turbine exports are expected to maintain strong momentum in 2026, offering long-term profit growth headroom for the industry. Key focus areas remain leading turbine, component, and offshore wind companies.
Grid investment certainty is becoming more prominent, with continued watch on AIDC and export leaders. H1 ultra-high-voltage tenders surpassed RMB 29.2 billion, already exceeding the full-year 2025 total, and major project deliveries are slated for H2. In distribution networks, the first centralised procurement round concluded in June with prices bottoming out and repairing, while equipment concentration steadily improves. Grid investment carries high certainty and is poised to strengthen amid capital rebalancing. On the AIDC front, corporate orders and earnings are expected to show increasing flexibility in the latter half of the year; overseas supply for mid-to-high voltage equipment remains tight, accelerating Chinese firms' export push. Recommended attention centres on leaders in domestic demand, exports, and AIDC.
Key risks include policy changes, rising raw material costs for oil, copper, and aluminium that could inflate production expenses, and weaker-than-expected NEV sales volumes.