JPMorgan cuts CATL price target to HK$500
Key Facts
JPMorgan cut its rating on CATL’s Hong Kong-listed shares from overweight to neutral and lowered its price target from HK$725 to HK$500, warning that sector profitability was deteriorating faster than expected. The decision came after the company reported a 14.5% year-on-year rise in third-quarter net profit to 21.2 billion yuan. Analysts had expected profit growth of 41.2%, according to LSEG SmartEstimate data cited by Reuters. Actual growth was therefore well below expectations, despite an increase in quarterly revenue. The results put competitive pressure and a slowing Chinese auto market at the forefront of challenges facing the world’s largest electric vehicle battery maker.
CATL’s third-quarter revenue rose 58.6% year on year to 165.2 billion yuan but fell short of expectations for 60.2% growth, Reuters reported. Revenue growth was 56.9% in the previous quarter, meaning it accelerated in the third quarter but remained below analysts’ estimates. The comparison highlights the divergence between continued sales expansion and slower profit growth, as revenue growth did not translate into an increase in net profit at the level the market expected. Reuters said the company recorded its slowest profit growth in about two years. This comes as competition among battery makers for customers and markets intensifies.
Reuters attributed the slowdown in profit growth to fierce competition in the electric vehicle battery market, alongside subdued growth in car sales in China. The Chinese auto market contracted for 12 months through September, according to the report, while exports continued to support industry growth as companies expanded overseas. These conditions increase the importance of maintaining both market share and profitability as suppliers compete in a market where demand is shifting between China and overseas markets. CATL’s global performance presents a different picture from its domestic position: its share of global electric vehicle battery usage reached 39.4% in the first eight months of 2026, compared with 37.7% in the same period a year earlier. By contrast, BYD’s global share fell to 15.1% from 17.1%.
The company’s domestic share of power battery installations in China, however, declined over the year. CATL’s share fell to 40.9% in September from 49.8% in January, while BYD’s rose to 21.1% from 17.4% over the same period, according to Reuters. The figures highlight intensifying competition in the Chinese market, even as CATL’s global share grows. The results and price-target cut came as the company’s Hong Kong shares fell. In Wednesday’s session on October 21, the stock dropped 9.4% to HK$373.2, its lowest level in 15 months, while its Shenzhen-listed shares also declined.
CATL is seeking to expand its energy storage business to reduce its growth reliance on the auto battery market. It expects energy storage batteries to account for half of its global revenue by 2030, compared with about a quarter currently, according to a Reuters report published in June 2026. The target gives the company a path to diversify its revenue sources, but expansion will be tested as its core battery business faces profit pressure. The plan comes as September data showed its share of China’s installation market declining, despite an improved position in global usage. Quarterly revenue growth below expectations, alongside the gap in profit growth, also remains central to JPMorgan’s decision to cut its rating and price target. The reduction of the price target to HK$500 signals the bank’s lower valuation of the Hong Kong-listed shares compared with its previous target of HK$725.