Shenwan Hongyuan Group Co., Ltd. has released a research report previewing the performance of the new energy sector for the first quarter of 2026. The report indicates that price recovery in the lithium battery industry chain continues. Despite being a traditional low-demand season, demand is expected to remain robust. Overall profitability in the downstream battery segment is projected to be stable, while mid- and upstream material segments are anticipated to show high profit elasticity.
In the wind power sector, the later timing of the Spring Festival holiday in Q1 2026 compared to the previous year has led to delayed project commencements. Coupled with advanced component stockpiling in Q1 2025, which created a relatively high base, the sector's overall performance year-on-year is expected to remain generally flat. Some component segments may experience a slight year-on-year decline. However, the export chain demonstrates high prosperity, with both shipment volumes and performance forecasted to achieve significant year-on-year growth.
Furthermore, key energy storage companies saw substantial year-on-year growth in both revenue and shipment volumes during Q1 2026, exhibiting a characteristic of stronger-than-expected performance during the off-season.
Key viewpoints from Shenwan Hongyuan are as follows:
**Lithium Battery: Strong Off-Season Demand Drives Impressive Profits** Following high sequential growth in production schedules during Q4 2025, industry output saw major year-on-year increases at the start of 2026. Data shows that from January to February 2026, domestic production volumes for NCM cathodes, LFP cathodes, anodes, separators, electrolytes, and lithium batteries were 150,000 tons, 740,000 tons, 490,000 tons, 5.1 billion square meters, 400,000 tons, and 363 GWh, representing year-on-year increases of 48%, 55%, 47%, 45%, 44%, and 49% respectively. Concurrently, price recovery in the lithium battery chain continued in Q1 2026. Amid robust off-season demand, profitability in the downstream battery segment is expected to remain stable, while mid- and upstream material segments show high profit elasticity.
**Photovoltaics: Export Tax Rebate Cancellation and Silver Price Surge Boost Module Prices and Volumes** Driven by the window period before the cancellation of export tax rebates effective April 1st, overseas markets saw concentrated procurement efforts in Q1 2026, leading to significant growth in module shipments. Simultaneously, sharp fluctuations in silver prices increased cell production costs, compelling multiple upward adjustments in module prices since the beginning of the year. Regarding performance guidance, major shareholder Canadian Solar Inc. projected Q1 module shipments of 2.2-2.4 GW, with gross margins recovering to 13%-15%, indicating a clear sequential improvement. Companies possessing silver-free technology hold a distinct cost advantage and greater profit elasticity. Overall, the photovoltaic sector is expected to achieve a profit recovery in Q1.
**Wind Power: Overall Stability with High Growth in Export Chain** Due to the later Spring Festival holiday and consequent delayed project starts in Q1 2026, combined with the high base from advanced component stockpiling in Q1 2025, the wind power sector's performance is anticipated to be generally stable year-on-year, with some component segments seeing a slight decline. However, the export chain shows high activity, with shipment volumes and performance expected to achieve significant year-on-year growth. Additionally, turbine prices have continued to stabilize and rise. Given the lag between winning bids and project delivery, low-priced orders from 2025 have been largely cleared, with the profit bottom likely occurring in Q4. Higher-priced orders are expected to be delivered mostly in 2026, potentially releasing significant profit elasticity for turbine manufacturing businesses, suggesting a profit inflection point may arrive in Q1 2026.
**Energy Storage: Exceeding Delivery Expectations, Grid-Forming Tech Drives Growth** Key energy storage companies reported significant year-on-year growth in both revenue and shipment volumes during Q1 2026, demonstrating strong performance during the traditional off-season. Domestically, Q1 bidding and grid-connection scales saw high year-on-year growth, with penetration of grid-forming technology significantly increasing in regions with high renewable energy penetration like Northwest and North China. Looking ahead to Q2 2026, as the peak installation season begins, large-scale storage orders from the Middle East and Southeast Asia are expected to accelerate. Demand resilience in Europe and the US is likely to persist following inventory replenishment cycles. Domestically, energy storage profit models are expected to evolve from simple "peak-valley arbitrage" towards "multiple revenue streams," promoting volume growth and profit stability in the global energy storage market and initiating a new upward cycle.
**Investment Analysis Recommendations:** The starting point of a new cycle for new energy has commenced, with profitability entering an upward trajectory. Focus is recommended on three main themes: 1) **Cyclical Growth:** Contemporary Amperex Technology Co., Limited, Eve Energy Co., Ltd., Hunan Yuneng New Energy Materials Co., Ltd., Jinlei Technology Co., Ltd., Shangtai Technology Co., Ltd., Yunnan Energy New Material Co., Ltd. 2) **Technological Innovation:** Beijing Easpring Material Technology Co., Ltd., Xiamen Tungsten Co., Ltd., Aiko Solar Energy Co., Ltd., Risen Energy Co., Ltd., Jinko Solar Co., Ltd. 3) **Expansion into AIDC Secondary Business:** Sungrow Power Supply Co., Ltd., Shenzhen Sinexcel Electric Co., Ltd.
**Risk Warning:** Electric vehicle sales may fall short of expectations; raw material prices could experience significant fluctuations; risks of deepening overseas trade barriers.