Tianqi Lithium Corporation: Q3 net profit rebounded sharply on improved pricing and investment gains, despite lower revenue

By Megan Cheah and Tracy Qu

China's plans to boost energy storage and support its auto industry spurred a rally in sector stocks on Monday, sending shares of the world's largest electric-vehicle battery maker to new heights.

The gains followed the government's announcement Friday that it will invest 250 billion yuan, equivalent to about $35.09 billion, in the energy-storage sector through 2027.

The move could drive demand for Chinese lithium-battery makers, said Vincent Sun, senior equity analyst at Morningstar.

Hong Kong-listed shares of Contemporary Amperex Technology, or CATL, jumped as much as 10% to an intraday record HK$476.80 before paring gains, while its Shenzhen-listed stock climbed about 14% to the highest level in nearly four years.

Recent brokerage upgrades likely added momentum, said Eugene Hsiao, head of China equity strategy at Macquarie Capital.

Other lithium producers rallied as well, with Tianqi Lithium and Ganfeng Lithium advancing in Hong Kong. Automakers gained too, buoyed by policy optimism.

China's Ministry of Industry and Information Technology and other departments issued a plan to improve supply quality, expand domestic consumption and support auto trade-ins and battery renewals.

The plan set a 2025 sales target of 32.3 million vehicles, up 3% from last year, including a 20% increase in sales of new-energy vehicles.

The plan indicates the industry should achieve stable growth by 2026, with improvements in scale, quality and efficiency. CATL is likely to be a beneficiary, said Macquarie Capital's Hsiao.

Nomura analyst Joel Ying said the measures should also bolster investor sentiment toward automakers more broadly. EV makers in China have faced pressure from slowing domestic demand, and Beijing's clampdown on what it calls excess competition and "toxic" pricing behavior.

Still, targets for growth and the continued consumer trade-in program could ease concerns about the sector's outlook, Nomura's Ying said.

Among the top gainers in the auto sector Monday, Li Auto rose 4.6% in Hong Kong, BYD gained 3.5%, XPeng climbed 1.6% and Nio advanced 3.5%. Mainland-listed shares were also broadly higher.

Write to Megan Cheah at megan.cheah@wsj.com and Tracy Qu at tracy.qu@wsj.com