"20251203 Morgan Stanley Cycle Swordsmanship Conference": Specific investment potential tips for each industry

Detailed Meeting Minutes Summary
1. New Energy and Power Systems
Core Logic: Transition from the "14th Five-Year Plan" to the "15th Five-Year Plan," emphasizing system stability, with thermal and nuclear power gaining prominence, solar PV cooling in the short term, and wind power (especially offshore wind) showing resilience.

Power Planning ("15th Five-Year Plan" 2026-2030):
Traditional Energy Resurgence: To ensure system stability before the 2030 peak, thermal and nuclear power capacity will increase. 80GW of newly approved thermal power will gradually come online; 2027-2028 will see a peak in nuclear power commissioning.
Slower Growth in New Energy: The pace of new energy deployment by state-owned enterprises and the "Big Five" power groups may slow during the "15th Five-Year Plan" compared to the "14th Five-Year Plan."
Divergence in Wind and Solar:
Solar PV "Cooling Period": 2024 installations ~300GW, but expected to drop sharply to 150-200GW in 2025 (due to policy and planning cycles), recovering in 2027.
Wind Power "Resilience": Expected annual installations of 100-120GW. Offshore wind is a highlight; if deep-sea action plans are introduced, offshore wind could rebound to 15-20GW/year post-2027.
Grid and Demand:
Demand: Power demand elasticity coefficient of 1-1.5, outpacing GDP.
Investment: Grid investment growth faster than demand growth, focusing on UHV (25-30 lines/year) and distribution networks.
New Variable: Smart microgrids could be an unexpected factor in the later stages of the "15th Five-Year Plan."

2. Independent Energy Storage and Batteries
Core Logic: Storage shifts from "mandatory allocation" to "market-driven," with economics established; battery sector benefits from commercial vehicle penetration and leading players' valuation recovery.

Independent Storage (Shanxi Case):
Policy Tailwinds: "Document No. 136" promotes new energy market entry, widens peak-valley price gaps, highlighting storage's role as a smoothing tool.
Profit Model: Primary/secondary frequency regulation markets open to independent storage (70-80% of revenue); Shanxi exempts 80% of capacity fees (significantly boosting returns).
Rush: Private firms are highly active, currently in a "race for transformer spots" phase.
Battery and Storage Views:
Steady Demand: Storage CAGR expected at 25% over the next five years. Ending mandatory allocation is a positive (previously a vanity project, now a necessity).
CATL: Despite subsidy phase-outs, growth persists in Europe, with commercial vehicles (trucks) as the biggest highlight (30% heavy truck penetration expected), driving 50%+ growth. Valuations are highly attractive at current levels.

Raw Materials:
Bullish:
Separators: Capital-intensive, no expansion, high gross margin elasticity.
Base Metals: Storage drives incremental demand for aluminum, copper, lithium; aluminum and copper expected to face shortages next year.
Cautious/Bearish: Electrolytes (overvalued), anodes/cathodes (overcapacity, weak pricing power).

3. Transportation
Core Logic: Cyclical upturn, supply-side bottlenecks, and geopolitical disruptions create opportunities.

Aviation:
Supply-Demand: Supply-side (aircraft/engines) fragile, hard to repair quickly.
Uptrend continues.
Routes: China-Japan flights reduced, capacity shifted domestically or to Thailand.
Recommendations: Overweight the "Big Three" airlines (HK stocks) and Spring Airlines.
Tanker Shipping:
Geopolitical Dividends: Russia-Ukraine conflict benefits tankers regardless of ceasefire (ceasefire requires restocking, no ceasefire maintains inefficient shipping).
Freight Rates: VLCC spot rates high (>$100k/day), forecast average $60-65k next year.
Recommendations: Remain optimistic, buy on dips (COSCO SHIPPING Energy).
Airports (Shanghai/Capital):
Duty-Free Negotiations: New contracts imminent, foreign bidder inclusion a major positive.
Royalty Expectations: Actual ceiling high; Shanghai Airport's royalty rate hike to 30% could lift earnings forecasts by 10%.
Valuation: Shanghai Airport's valuation (25-30x PE) above peers, but caution needed until fundamentals (per capita duty-free spend) bottom.


In-Depth Trend Analysis
1. Energy Investment Logic's "Qualitative Shift": From Scale to Efficiency
Past (14th Five-Year): Full-speed ahead on new energy, mandatory storage, reckless capacity expansion.
Future (15th Five-Year): Solar PV faces a "halftime break," with pure module manufacturing and installations no longer a compelling story, even at risk of cliff-like declines.
Storage has completed its shift from "policy burden" to "profitable asset." The Shanxi model proves independent storage's strong viability under market-driven pricing.
Grids become the focus of 短板补齐， with UHV and distribution upgrades as 必经之路 for new energy integration.

2. Lithium Battery Chain's "Structural Divergence"
Vehicle Logic Shift: Passenger vehicle growth slows, commercial vehicles (heavy/light trucks) take over as the new electrification engine. CATL's growth narrative now heavily weights commercial vehicles.
Post-Inventory Drawdown Divergence: Not all materials are equal. Capital-intensive, hard-to-expand segments (e.g., separators) and upstream resources (copper, aluminum) offer more value than oversupplied midstream (anodes, cathodes, electrolytes).

3. Transport Sector's "Supply-Side Deflation" Dividends
Whether aviation or shipping, the logic is no longer demand explosion but supply constraints.
Planes can't be built/repaired -> firm fares.
Aging tankers await scrapping/low inventories -> high freight rates.
Supply-driven cycles are typically longer and more stable than demand-driven ones.

Investment Implications
Seek Structural Growth Amid Stability
Top Picks (Long):
1. Independent Storage & Grid Equipment: Benefit from pricing reforms and grid investment (UHV, distribution).
2. CATL & Commercial Vehicle Battery Chain: Low valuations, strong new growth logic from commercial EV adoption.
3. Select Battery Materials & Resources: Separators (high barriers), copper/aluminum (storage-driven shortages).
4. Transport Leaders:
Tankers: COSCO SHIPPING Energy (geopolitical hedge + inventory cycle).
Airlines: HK-listed Big Three, Spring Airlines (supply scarcity thesis).
5. Offshore Wind: More policy/installation flexibility vs. solar.

Avoid/Cautious (Short/Neutral):
1. Solar Manufacturing/Installations: 2025 risks halved installations, entering a "cooling period."
2. Oversupplied Battery Midstream: Cathodes, anodes, electrolytes (weak pricing power).
3. Airports (short-term): Duty-free optimism partly priced in; consumption recovery unconfirmed, risk-reward lags airlines/tankers.