Trustan Hong Kong indicates that the global transition to new energy is a trend that cannot be ignored. China has a relatively large market size and demand, coupled with technological progress and government policy support, the new energy industry in China has been developing rapidly in recent years. In 2024, certain parts of the industry chain may accelerate integration, while material prices may stabilize. The demand in the new energy market is expected to achieve high-speed growth and improve the supply-demand situation. The phase-out of subsidies can guide the market to stimulate demand in a self-driven manner, forcing companies to focus more on technological innovation and cost-effectiveness, and enhance competitiveness. With further improvement in supply and demand, it is expected that the profitability of the new energy industry in 2024 may outperform the overall stock market in mainland China. Trustan Hong Kong points out that in the past one or two years, the industry has faced some challenges, including fierce competition, overcapacity, fluctuating raw material prices, and the partial phase-out of subsidy policies, which have put pressure on the profitability of new energy companies. The overall performance of the new energy industry did not meet expectations, shaking investor confidence at one point. However, after a round of industry consolidation and structural adjustments, 2024 could potentially be a turning point. Firstly, the oversupply situation in the market has gradually improved, with some third-tier factories facing losses due to low capacity utilization rates, and companies with low expected profitability are expected to gradually exit the market. After the survival of the fittest, certain parts of the industry chain may accelerate integration in 2024, with expectations of material prices stabilizing. On the other hand, the demand in the new energy market in 2024 is expected to achieve high-speed growth or significantly improve the imbalanced supply-demand situation. Trustan Hong Kong predicts that global sales of new energy vehicles will continue to rise in 2024, with total sales approaching 16 million units, a 20% year-on-year increase. In addition, the increase in overseas sales of pure electric vehicles will drive up demand for Chinese batteries, and it is expected that global demand for automotive batteries will rise rapidly to 1250 gigawatt-hours (GWh) in 2024, a 26% year-on-year increase. The increase in global sales of new energy vehicles will also benefit the automotive assembly industry, which may alleviate the oversupply situation in certain parts of the new energy industry, serving as a potential positive factor. Secondly, for some relatively mature industries, government support measures are transitioning from the industry chain to the consumer level. The withdrawal of government subsidy policies is not entirely negative, as it can guide the market to stimulate demand growth in a self-driven manner, while forcing companies to focus more on technological innovation and cost-effectiveness, enhance competitiveness, and promote the overall development of the new energy market in a more long-term, healthy, and sustainable manner. Furthermore, investors have concerns about the development of the new energy industry, which have been reflected in the valuation of new energy stocks. Currently, the overall price-earnings ratio of the new energy industry is only 12 times, at a historical low. However, with further improvement in supply and demand in the future, it is expected that the profitability of the new energy industry in 2024 will increase by 19.5%, outperforming the overall mainland stock market, and the growth rate may further accelerate in 2025. Trustan Hong Kong expects that against the background of further fiscal policy support and a rebound in household spending, the macroeconomic situation in China is expected to improve in 2024, and the Chinese stock market is expected to benefit from the recovery in profits and valuation repair. The low valuation of the new energy sector currently offers investors an opportunity to enter the market. Looking ahead to 2024, Trustan Hong Kong believes that investors should focus on the new energy vehicle and offshore wind power industries. In terms of new energy vehicles, Trustan Hong Kong is optimistic about the future development of the new energy vehicle industry. The overall penetration rate of new energy vehicles in 2023 is 17%, still far from the target penetration rate of 50-70%. It is expected that with the launch of low-priced models and the promotion of European carbon emission assessments in 2025, new energy vehicles may enter a new cycle of accelerated penetration rate. The company is bullish on leading lithium battery companies that have cost advantages, technological leadership, and overseas presence. These companies are able to maintain strong profitability even in the face of significant losses in other industries, and they may gain more market share and stronger profitability in the next upturn cycle. Given the decline in valuations, 2024 may be a relatively ideal opportunity for investment. Regarding offshore wind power, Trustan Hong Kong expects annual installation capacities of 5/10/15 GW in the years 2023 to 2025, entering a phase of higher growth. Globally, the commercialization of floating offshore wind power is accelerating, with China's costs of floating offshore wind power continuously decreasing, capturing market opportunities. The global installation of offshore wind power is expected to increase from 12 GW in 2023 to 26.7 GW in 2025, with China contributing the majority of the installations. Overall, the company mainly favors the offshore cable and pile industries, as the value of these industry chains will gradually increase with the increasing distance from the offshore wind farm. .