In-depth Analysis of the Driving Factors Behind the Lithium Battery Sector's Surge and Tianhua New Energy's Investment Value

This analysis is based on market performance on December 27, 2025. The lithium battery sector rose strongly overall, and Tianhua New Energy (300390) saw its stock price surge 8.01% to CNY 57.03, with significantly increased trading volume (71.35M, far higher than the average of 58.26M) [0]. The company’s year-to-date gain has reached 154.60%, with a market capitalization of CNY 47.38 billion [0].

Bullish sentiment is strong, but caution is needed to distinguish between industry prosperity and individual stock fundamental risks.

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Lithium carbonate prices have exceeded , up over from the mid-2025 low [1][2]. Since November 2025, lithium carbonate futures prices have gradually risen with increased volatility, and market expectations for future lithium prices have turned optimistic [1].

Prices of phosphate, monoammonium phosphate, ferrous sulfate, and other lithium iron phosphate precursor chemical raw materials have generally risen since Q4 2025, with an average monthly increase of 3.1%-8.5%, forming cost support [3].

Domestic new energy storage bidding volume exceeded from January to November 2025, a , with large-scale projects continuing to expand [1][2].

The “Special Action Plan for Large-Scale Construction of New Energy Storage (2025-2027)” clearly states that by 2027, the national new energy storage installed capacity will reach or more, expected to drive direct project investment of about [1].

LG Energy Solution plans to increase its total energy storage battery capacity from 30 GWh to 50 GWh by 2026, an increase of [1]. GGII Energy Storage Research Institute predicts that China’s energy storage lithium battery shipments will reach in 2025, with a growth rate of over [3].

From January to November 2025, China’s new energy vehicle production and sales reached and , up and YoY respectively [3].

The International Energy Agency predicts that global electric vehicle sales will exceed in 2025, accounting for over of total new car sales [3].

From January to November 2025, China’s lithium iron phosphate power battery sales reached , with a market share of and a YoY sales growth rate of [3].

In November 2025, 7 leading lithium iron phosphate enterprises including Hunan Yonon New Energy, Wanhua New Energy, and Desay Nano held a meeting, and the China Association of Chemical Physics Power Sources issued a collaborative action initiative to rebuild market pricing logic with cost index as the “measurement” and curb “involution-style” vicious competition [3].

Shanghai Nonferrous Metals Network research shows that recently lithium iron phosphate enterprises and downstream cell factories continue to conduct price increase negotiations, and leading enterprises have entered the [3].

In mid-December 2025, the Natural Resources Bureau of Yichun City, Jiangxi Province, publicly announced plans to cancel , triggering market concerns about supply contraction [2].

Market inventory has gradually accelerated de-stocking, lithium salt production has slightly declined, and the supply-demand pattern has improved [1].

The wave of artificial intelligence has pushed global data center construction into a new round of explosion, driving exponential growth in the global data center energy storage market and providing a new growth pole for lithium battery demand [4].

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Indicator	Data	Source
Today’s Stock Price	CNY57.03 (+4.23, +8.01% )	[0]
Today’s Trading Volume	71.35M (far higher than average 58.26M)	[0]
Year-to-Date Gain	+154.60%	[0]
3-Month Gain	+149.58%	[0]
6-Month Gain	+192.61%	[0]
Market Capitalization	CNY47.38 billion	[0]
52-Week Range	CNY17.02 - CNY64.99	[0]

• Main Business:
  New energy lithium battery materials account for
  over 90%
  of revenue, mainly producing battery-grade lithium hydroxide and battery-grade lithium carbonate [5][6]
• Current Capacity:
  Total
  165,000 tons
  of lithium salt production capacity
  • Sichuan Yibin Tianyi Lithium Industry: Annual output of
    75,000 tons
    of battery-grade lithium hydroxide [5]
  • Sichuan Meishan Sichuan Tianhua: Annual output of
    60,000 tons
    of battery-grade lithium hydroxide (convertible to about
    55,000 tons
    of battery-grade lithium carbonate) [5]
  • Jiangxi Yichun Fengxin Era: Annual output of
    30,000 tons
    of battery-grade lithium carbonate [5]
• Future Planning:
  The company will increase lithium salt production capacity to
  250,000-260,000 tons/year
  according to market demand [5]

• Global Layout:
  The company holds multiple lithium mining rights in Nigeria and has mining and beneficiation factories; it holds controlling lithium mining rights in the Democratic Republic of Congo [5]
• Supply Guarantee:
  Has signed long-term supply agreements with multiple spodumene suppliers, covering Australia, Brazil, and Africa [8]

• Transaction Details:
  On October 31, 2025, CATL acquired
  12.95%
  stake (108 million shares) of Tianhua New Energy for
  CNY2.635 billion
  , with a post-transaction stake of
  13.54%
  , becoming an important strategic shareholder [9][10][11]
• Strategic Significance:
  • CATL’s (37% global power battery installed capacity in 2024) investment shows long-term confidence in the lithium battery material industry [7]
  • CATL承诺
    18 months no reduction
    , showing confidence in its long-term development [7]
  • Significant industry chain synergy effect: Expected to reduce intermediate costs by about
    10%-15%
    [7]
  • Capital injection: CNY2.635 billion transfer payment will ease financial pressure (net cash flow from operating activities in H1 2025 was -CNY320 million) [7]

• Quarterly Performance:
  Achieved revenue of
  CNY2.11 billion
  in Q3 2025, EPS of
  CNY0.23
  (CNY-0.09 in Q2 2025) [0]
• YoY Improvement:
  Q3 net profit of
  CNY189 million
  , up
  113% YoY
  [7]
• Performance Inflection Point:
  Affected by the rebound in lithium salt product prices, the company’s Q3 operating performance increased significantly YoY and turned from loss to profit sequentially [7]

Indicator	Value	Assessment
P/E Ratio	-1140.60	Negative (loss-making) [0]
P/B Ratio	4.34x	Reasonable [0]
ROE	-0.39%	Negative [0]
Net Profit Margin	-0.64%	Negative [0]
Current Ratio	1.51	Good liquidity [0]
Quick Ratio	1.19	Acceptable short-term solvency [0]
Asset-Liability Ratio	26.4% (H1 2025)	Low risk [7]
Free Cash Flow	CNY167 million	Positive [0]
Debt Risk	low_risk	Low risk [0]

Aggressive (aggressive accounting, low depreciation/capital expenditure ratio) [0]

• Current Dilemma:
  Negative P/E (-1140.60x) due to H1 2025 net profit loss of
  CNY156 million
  [0][7]
• Repair Expectation:
  With lithium price stabilization (lithium price rebounded about 15% in Q3 2025) and performance improvement (Q3 net profit of CNY189 million, up 113% YoY), valuation is expected to repair to the industry average level (PE about
  30x
  ) [7]
• Market Confidence:
  CATL’s investment as a “new energy industry weathervane” has alleviated market concerns about “overcapacity of lithium battery materials” [7]

• High Volatility:
  Average daily volatility has reached
  5.44%
  since December 2025 [0]
• Price Position:
  Current stock price of CNY57.03 is close to the 52-week high (CNY64.99) [0]
• Excessive Short-Term Gains:
  Year-to-date gain of
  154.60%
  , short-term correction risk exists [0]

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• Currently still in loss-making state, negative P/E ratio, H1 2025 net profit loss of CNY156 million [0][7]
• Negative ROE and net profit margin, -0.39% and -0.64% respectively, profitability needs to be improved [0]

• Excessive year-to-date gains (154.60%), short-term correction pressure
• Current stock price close to 52-week high, technical adjustment risk increases

• Lithium price volatility risk: Although prices have rebounded, there are still uncertainties in the long term
• Overcapacity risk: Industry capacity expansion is fast, if demand is less than expected, price wars may occur

• Aggressive financial attitude, using aggressive accounting policies, low depreciation/capital expenditure ratio [0]

• Dual-drive of energy storage + new energy vehicles, clear policy support
• Domestic new energy storage bidding volume exceeded 400 GWh from January to November 2025, up 75% YoY [1][2]
• New energy vehicle production and sales reached 14.907 million units and 14.78 million units respectively, up over 31% YoY [3]

• CNY2.635 billion investment + industry chain synergy, providing stable orders and capital support
• Commitment to no reduction for 18 months, showing long-term confidence [7]

• Q3 turned from loss to profit, net profit of CNY189 million, up 113% YoY [7]
• Lithium prices continue to rebound, expected to support sustained performance improvement

• 165,000 tons of lithium salt production capacity, planning to expand to 250,000-260,000 tons/year [5]
• Global upstream resource layout, strong supply guarantee capacity

• Asset-liability ratio of 26.4%, positive free cash flow [0][7]

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✅

, up over 50% from mid-year low [1][2]
✅ , domestic new energy storage bidding volume exceeded 400 GWh from January to November 2025, up 75% YoY [1][2]
✅ , 14.907 million units produced and 14.78 million sold from January to November, up over 31% YoY [3]
✅ , holding 13.54% stake,承诺 no reduction for 18 months [9][10][11]
✅ , net profit of CNY189 million, up 113% YoY [7]
✅ , 165,000 tons of lithium salt production capacity, planning to expand to 250,000-260,000 tons/year [5]
✅ , asset-liability ratio of 26.4%, positive free cash flow [0][7]

⚠️

, negative P/E ratio, H1 2025 net profit loss of CNY156 million [0][7]
⚠️ , -0.39% and -0.64% respectively, profitability needs to be improved [0]
⚠️ (154.60%), close to 52-week high, short-term correction risk exists [0]
⚠️ , using aggressive accounting policies, low depreciation/capital expenditure ratio [0]
⚠️ , although prices have rebounded, there are still uncertainties in the long term

• Price Trend:
  Lithium carbonate/lithium hydroxide price trend
• Performance:
  Company’s quarterly performance (especially Q4 and Q1 2026)
• Cooperation Progress:
  Synergy cooperation progress between CATL and the company
• Industry Data:
  Energy storage and new energy vehicle sales data
• Capacity Utilization:
  Company’s capacity utilization and expansion progress

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1. High certainty of industry prosperity, dual-drive of energy storage + new energy vehicles
2. CATL strategic investment provides endorsement and industry chain synergy
3. Clear performance inflection point, Q3 turned from loss to profit
4. Leading production capacity scale, perfect upstream resource layout
5. Low debt risk, stable financial structure

1. Currently still in loss-making state, profitability needs to be improved
2. High valuation repair pressure, needs sustained performance improvement support
3. Excessive short-term gains, correction risk exists
4. Aggressive financial attitude, need to pay attention to profit quality

Cautiously Bullish

• Excessive short-term gains, close to 52-week high, correction risk exists
• Not recommended to chase highs, wait for correction before considering entry

Bullish

• Sustained industry prosperity (strong demand for energy storage + new energy vehicles)
• CATL synergy effect gradually体现
• Clear performance improvement trend (Q3 turned from loss to profit)
• Lithium prices are expected to continue to rebound
• Focus: Q4 performance, lithium price trend, CATL cooperation progress

Bullish

• Irreversible global electrification trend
• Energy storage market enters explosion period
• Leading production capacity scale, high industry chain integration
• CATL long-term strategic support
• Risks: Sharp decline in lithium prices, overcapacity, technical route changes

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This analysis provides information collection, analysis, and market background to support decision-making, and does not constitute investment advice, transaction recommendations, or financial guidance.