Economic Information Agency (20th) - CATL (03750) H-shares are down 7.1%, trading at HK$409.6. At current levels, the stock has declined for five consecutive days, with a cumulative drop of 17.2%. Trading volume stands at approximately 2.03 million shares, involving a turnover of HK$845 million.
CATL is scheduled to release its third-quarter earnings after market close today. Prior to the announcement, its share price has been under pressure, and today the H-share hit a new low of HK$408.6, the lowest level in over a year. JPMorgan recently issued a research report downgrading CATL's H-share rating from "Neutral" to "Underweight" ahead of the earnings release, slashing its target price by 30% to HK$500. JPMorgan noted that although it expects global electric vehicle and energy storage battery demand to grow 20% to 25% higher than market expectations by 2027, what truly affects battery companies like CATL is not demand volume, but rather their profitability deteriorating faster than anticipated.
*JPMorgan: Automakers and Battery Makers Are Undergoing Profit Reallocation; CATL Faces Short-Term Pressure but Remains Resilient*
JPMorgan's report analysis indicates that downstream automakers, under profit pressure and facing additional challenges such as battery consumption tax, reduced export VAT rebate rates, and increasing trade barriers, have become more cautious in cost control. This will lead automakers to shift a significant portion of these burdens upstream along the supply chain. The bank emphasizes this is not merely a traditional price war, but a reallocation of profits; it's not just about battery overcapacity, but rather a deterioration of the entire EV ecosystem. The key concern is no longer declining profits, but how profits will be redistributed.
However, JPMorgan also stresses that it maintains an "Overweight" rating on CATL's A-shares, currently the only stock in the sector still rated "Overweight" by the bank. It explains that although CATL is the most immediately impacted in this profit reallocation process, the expected impact on second-tier battery makers' profitability will likely be even greater. Whether CATL chooses to pass on the cost burden or absorb part of it internally, the bank believes the ultimate outcome could result in stronger customer stickiness, higher switching costs, and further industry consolidation. As industry profit margins narrow and capital requirements increase, JPMorgan believes "financial resilience" may become the next competitive battleground, which would further consolidate CATL's competitive advantage.
Currently, the Hang Seng Index stands at 23,924, down 262 points or 1.1%, with main board turnover exceeding HK$43.6 billion. The Hang Seng China Enterprises Index is at 8,055, down 72 points or 0.9%. The Hang Seng Tech Index is at 4,042, down 65 points or 1.6%. (hc)
CATL is scheduled to release its third-quarter earnings after market close today. Prior to the announcement, its share price has been under pressure, and today the H-share hit a new low of HK$408.6, the lowest level in over a year. JPMorgan recently issued a research report downgrading CATL's H-share rating from "Neutral" to "Underweight" ahead of the earnings release, slashing its target price by 30% to HK$500. JPMorgan noted that although it expects global electric vehicle and energy storage battery demand to grow 20% to 25% higher than market expectations by 2027, what truly affects battery companies like CATL is not demand volume, but rather their profitability deteriorating faster than anticipated.
*JPMorgan: Automakers and Battery Makers Are Undergoing Profit Reallocation; CATL Faces Short-Term Pressure but Remains Resilient*
JPMorgan's report analysis indicates that downstream automakers, under profit pressure and facing additional challenges such as battery consumption tax, reduced export VAT rebate rates, and increasing trade barriers, have become more cautious in cost control. This will lead automakers to shift a significant portion of these burdens upstream along the supply chain. The bank emphasizes this is not merely a traditional price war, but a reallocation of profits; it's not just about battery overcapacity, but rather a deterioration of the entire EV ecosystem. The key concern is no longer declining profits, but how profits will be redistributed.
However, JPMorgan also stresses that it maintains an "Overweight" rating on CATL's A-shares, currently the only stock in the sector still rated "Overweight" by the bank. It explains that although CATL is the most immediately impacted in this profit reallocation process, the expected impact on second-tier battery makers' profitability will likely be even greater. Whether CATL chooses to pass on the cost burden or absorb part of it internally, the bank believes the ultimate outcome could result in stronger customer stickiness, higher switching costs, and further industry consolidation. As industry profit margins narrow and capital requirements increase, JPMorgan believes "financial resilience" may become the next competitive battleground, which would further consolidate CATL's competitive advantage.
Currently, the Hang Seng Index stands at 23,924, down 262 points or 1.1%, with main board turnover exceeding HK$43.6 billion. The Hang Seng China Enterprises Index is at 8,055, down 72 points or 0.9%. The Hang Seng Tech Index is at 4,042, down 65 points or 1.6%. (hc)
