Changing Gigafactory Plans Put Battery Stocks in Focus

Alterations to the plans for battery factories in Europe have once again made people realize the importance of Chinese battery supply chain companies. The suspension in the plans by AESC of expanding the gigafactory in the UK has brought into question how the battery suppliers will be affected due to changes in the company's production strategy.

As large battery projects get stalled, diverted or altered, their effects will be felt by the whole chain. Therefore, investors are looking at battery suppliers in addition to the vehicle producers. Simply Wall St mentioned three such Chinese companies whose stocks can be an alternative to investing in this market: Hunan Yuneng New Energy Battery Material, Guangzhou Great Power Energy and Technology, and Sunwoda Electronic.

Hunan Yuneng New Energy Battery Material

Hunan Yuneng New Energy Battery Material Co Ltd makes lithium-ion battery cathode materials which include lithium iron phosphate and ternary materials.

The company earns a reported revenue of about CN¥42.8 billion from China and its market capitalization is around CN¥58 billion. This places it among the bigger companies in China's battery materials industry.

The shares stand out due to their relatively cheap valuation when compared to other electrical stocks. The discounted cash flow valuation done by Simply Wall St also indicates that the shares may be trading below their estimated fair value.

The company does have its problems. For instance, the high dependence on outside borrowings increases funding risk. The problem of board independence and compensation of the executives adds governance risks. The performance of the company in the first half of 2026 and amendment of its articles of association can also affect the way its growth is perceived.

Guangzhou Great Power Energy and Technology

Guangzhou Great Power Energy and Technology designs batteries for energy storage, electric cars, and consumer goods in China and internationally.

The firm claims that it earns CN¥15 billion in revenues from manufacturing electronic components and has a market capitalization of about CN¥33.1 billion. Its product range includes energy storage systems for grids, two-wheelers, power tools, and consumer electronics.

The company may gain if the postponement of gigafactories in Europe makes consumers think again of the choice of battery producers. Projections show that revenues and profits will rise considerably. However, the stock is currently overvalued because investors have high hopes from the company.

In addition, the firm depends completely on external financing, while its management team has no independence. Its track record of volatile share prices adds to the risks.

Sunwoda Electronic

Sunwoda Electronic is a Chinese battery maker that operates in the consumer electronics, electric vehicle, energy storage, and smart hardware sectors worldwide.

The company manufactures batteries and other components for smartphones, laptops, passenger and commercial vehicles, and grid storage facilities. Market capitalization of Sunwoda is estimated at around CN¥33.8 billion.

Sunwoda has a global research and development base and has been developing high-capacity energy storage products for Europe. Analysts forecast that the company’s revenues and profits will grow faster than the rest of the Chinese market.

However, profit margins are tight, last year’s net income fell significantly, and the company is highly leveraged and relies extensively on outside borrowing. The stock price is below a single estimate of internal cash flow value. However, high P/E ratio and one-time factors in recent results complicate the interpretation of the valuation.

Investors Still Need to Weigh the Risks

Hunan Yuneng represents access to battery components and is valued cheaper by certain valuation metrics. The second firm, Guangzhou Great Power, includes access to both batteries and energy storage combined with a more promising outlook for growth but at the expense of higher valuation. The third company, Sunwoda, offers broad access to batteries in consumer electronics, EVs, and energy storage, although it has balance sheet and earnings considerations.

As Simply Wall St highlighted, these firms are just examples of firms out of a much larger screening process that resulted in 61 more companies in the global EV battery supply chain and gigafactory industry.

It should be noted that the assessment was done using historical data and projections and was meant to be viewed as market commentary, not investment advice. Moreover, the recent developments of the companies may not be taken into account in such an analysis.