---
endpoint: analytics
pattern: Energy
status: done
latency_ms: 278860
conversation_id: 06b03cb8-38f8-4ddc-9f55-2d6cc625df03
citations: 18
created: 2026-05-31 22:01:52Z
---

# What is the investment thesis for CATL in the current market environment?

# CATL (300750 CH / 3750 HK) — Investment Thesis in the Current Market Environment

**Vintage caveat**: The internal research corpus (CLSA) on this name is most recent through **10 June 2025**. The most current public earnings-call material in the indexed transcripts goes through CATL's mid-2024 IR sessions. Today is **31 May 2026** — readers should weight this as the *latest documented thesis available in scope*, not real-time positioning. Where the thesis depends on time-sensitive variables (tariffs, EV penetration cadence), I flag it explicitly.

---

## I. Bottom Line — Rating & Targets

CLSA's latest standalone view (June 10, 2025 — "Green shoots") carries **High-Conviction Outperform** on both share classes, with a CATL-A target of **Rmb380.00** and a CATL-H target lifted to **HK$447.00** (from HK$385) — implying +56%/+48% potential upside from the 10-Jun-25 reference price [1][2]. CATL is explicitly named CLSA's **top pick across its battery coverage** [13].

| Metric | 2023A | 2024A | 2025CL | 2026CL | 2027CL |
|---|---|---|---|---|---|
| Revenue (Rmbm) | 400,917 | 362,013 | 484,137 | 579,498 | 656,511 |
| Net profit (Rmbm) | 44,121 | 50,745 | 69,202 | 82,978 | 98,869 |
| EPS growth (% YoY) | (20.1) | 15.0 | 31.2 | 19.9 | 19.2 |
| EV/Ebitda (x) | 12.2 | 10.0 | 7.8 | 5.9 | 4.5 |
| ROE (%) | 24.4 | 22.8 | 25.2 | 24.7 | 24.2 |

Source: CLSA — "Green shoots", 10 Jun 2025 [3]

---

## II. The Five Pillars of the Bull Thesis

### 1. Premium-Segment Dominance Insulates CATL from China EV Price War

China EV sales growth is now expected to **decelerate to a ~10% CAGR through 2030** as the market matures and price-war intensity rises among OEMs [1]. The counter-intuitive bull case: the two ends of the EV curve — premium (>Rmb300k) and mass (<Rmb100k) — remain underpenetrated and are where 2030 incremental growth concentrates [1].

CATL holds a **72% share of China's high-end (premium) passenger EV battery market**, allowing it to extract higher ASPs and richer margins than mass-market competitors [8]. In a market where OEMs are bleeding each other on price, CATL's segment mix is its moat — slowing-but-richer growth is structurally better than the mass-segment volume race.

### 2. HK Listing Recapitalizes the European Expansion Story

In May 2025, CATL completed a **US$4.6bn HK IPO** (136m H-shares at HK$263) — the largest HK listing since 2021 — earmarked principally to fund Phase I & II of its **Hungary factory**, the cornerstone of European on-shoring [5]. With **US$45bn of cash on balance sheet**, CATL has the dry powder to fund both its European capex push and its R&D pipeline (particularly solid-state) without dilution risk [5]. Cornerstone book included Sinopec, Kuwait Investment Authority, UBS Asset Management, and Oaktree — a strategic-investor anchor base that limits float overhang.

Operationally, the **German factory** is mid-ramp with FY breakeven targeted, having secured Volkswagen Group dual cell/module certification; **Hungary** is benefiting from German learnings and is expected to deliver superior profitability at greater scale [12].

### 3. Technology Cycle Is Reaccelerating Margin Expansion

At its **April 2025 Tech Day**, CATL unveiled two products CLSA argues the market under-priced:

- **Naxtra sodium-ion battery** — energy density ~175 Wh/kg (LFP-equivalent), ~500 km range, targeted for **commercial production by end-2025**. Sodium-ion's historical bottleneck was inferior energy density; closing that gap turns it into a credible, lower-cost, more stable, cold-weather-robust alternative for mass-market EVs and ESS [14].
- **2nd-gen Shenxing LFP** — peak **12C charging**, delivering **520 km range from a 5-minute charge** and 800 km full-charge range, putting CATL parity with BYD's superfast-charging benchmark [15].

CLSA argues these two product launches "**should drive an improvement in CATL's blended margin in the coming quarters and revive its margin expansion story**" [6].

Beyond near-term: management is funding solid-state R&D toward **small-batch production by 2027** [11], plus a condensed-state battery (500 Wh/kg) targeting aviation use cases [11].

### 4. Global Scale and Market-Share Defensibility

CATL retains commanding share across geographies:
- **Global power-battery share: 37.5%** (Jan-May 2024, +2.3 ppt YoY) [9]
- **Domestic China power-battery share: 46.4%** (H1 2024, +3 ppt YoY), with ternary at 68.0% and LFP at 37.2% [9]
- **Europe share: ~35%** and rising [10]

Management's own framing: the industry's combination of high safety, customization, capital intensity, and tech intensity favors operators with scale revenue, deep cash reserves, and sustained R&D — driving a "**Matthew effect**" where CATL widens the gap vs peers [11]. Pair this with sodium-ion's commercialization and the case becomes one of share *defense* in legacy chemistries plus share *gain* in next-gen.

### 5. US Tariff Risk Is Quantifiable and Manageable

The headline overhang: roughly **40% of CATL's ESS batteries are US-bound**, exposing it to tariff escalation [7]. CLSA's adjudication of management commentary and the post-truce tariff schedule:

- Post US-China trade truce, **EV/ESS battery tariffs estimated at 58.4% / 40.9%** [18]
- Estimated cost differential vs US-domestic alternatives: **~16-20% at pack level for NCM/LFP**, with further divergence in favor of upstream-integrated leaders like CATL [18]
- Management guides **earnings impact contained at "low-single-digit"** [7], reasoning that CATL's dominant pricing power lets it pass through some of the burden [7]
- Korean peers' LFP scale-up is the bear pivot, but Chinese batteries should remain competitive on cost — with on-shoring (e.g., licensing/JV models) the likely US strategy [18]

The conclusion CLSA reaches: **market pricing of US tariff risk is too pessimistic** [7].

---

## III. Valuation Setup — Why Both Lines Work

CLSA's SOTP for CATL-A (Rmb380):
- EV batteries: **13x 26CL EV/Ebitda**
- ESS batteries: **12x 26CL EV/Ebitda**
- Battery materials & resources: **10x 26CL EV/Ebitda**
- Others: **5x 26CL EV/Ebitda** [2]

At entry levels in June 2025, the stock was trading at **~14.7x / 17.7x 26CL PE for CATL-A / CATL-H** — described as "still undemanding relative to earnings growth potential" given 19-20% EPS CAGR through 2027CL [3].

**The CATL-H trade specifically**: Post HK-listing, CATL-H rallied 23% in its first week vs CATL-A's 3%, opening up an **11% H-premium to A** — the highest dual-listing H-premium for any HK-China dual-listed name since 2014 [16]. CLSA argues this is not transient IPO froth but a **"new normal"** — BYD's H-share is similarly trading at a small premium to its A-share since May 2025 [16]. Hence the CATL-H TP was lifted from a 5% discount to a 10% premium vs A, generating the HK$447 target [2].

---

## IV. Key Risks to Monitor (Bear-Side Counter-Thesis)

1. **China EV mass-market saturation** — If the high-end EV TAM does not expand as quickly as CLSA's auto team models, CATL's premium-segment shield narrows.
2. **US tariff re-escalation** — The "temporary trade truce" framing is the key assumption holding the 58.4%/40.9% schedule in place [18]; this is vintage-sensitive to today's geopolitical state.
3. **Korean LFP catch-up** — Samsung SDI / LG Energy Solution scaling LFP is the most credible competitive threat to CATL's overseas ESS share.
4. **Solid-state timeline slippage** — A 2027 small-batch milestone is ambitious; competitive R&D from Toyota, Samsung SDI, and QuantumScape could compress CATL's first-mover narrative if delayed.
5. **HK premium normalization** — The H-A premium is now a load-bearing element of the CATL-H thesis; if BYD's analog premium decays, CATL-H specifically could de-rate.
6. **Lithium / raw-material price reversal** — H1 2024 GP margin uplift was driven partly by falling input costs flowing into ASPs with a lag [from earnings call commentary]; the same dynamic in reverse compresses margin.

---

## V. Why It Should Work From Here — Summary Pitch

CATL is a **scale-tech compounder** trading at a sub-mid-teens forward earnings multiple with **>25% ROE, ~36% EPS growth in 2025CL, mid-20s% EPS CAGR through 2027CL, and ~Rmb87bn of FCF by 2027CL** [3]. The thesis rests on three legs that are independently defensible:

- **Mix**: premium-segment China dominance (72% share) [8] yields better unit economics than the price-warred mass market.
- **Geography**: European on-shoring (Hungary) funded by a fresh US$4.6bn HK IPO [5] de-risks the only geography where competitors had a structural foothold.
- **Technology**: Naxtra (sodium-ion at LFP density) and Shenxing 2.0 (12C / 5-min charge) [14][15] revive the margin-expansion narrative, with solid-state by 2027 [11] preserving the long-cycle moat.

The largest single overhang — US tariffs on ESS — is quantifiable, partially passable, and bounded to a low-single-digit EPS hit by management [7]. After the May 2025 HK listing closed out the supply overhang, CLSA argues the market should "refocus on intrinsic value" [4] — a reasonable framing as long as the macro variables it assumes (truce holds, premium-EV TAM expands, solid-state timeline holds) remain in place.

---

**Sources**
[1][2][3][8] CLSA — "CATL — Green shoots" (10 Jun 2025) — 607961671LinqAlpha.PDF
[4][5][6][7] CLSA — "CATL — HC O-PF (A new era)" (20 May 2025) — 607959766LinqAlpha.PDF
[13][17][18] CLSA — "Energy materials monthly (Reramping interest in China battery)" (27 May 2025) — 607960627LinqAlpha.PDF
[14][15] CLSA — "CATL — O-PF (Leading the pack)" (21 Apr 2025) — 607956446LinqAlpha.PDF
[16] CLSA — "CATL — HC O-PF (A new normal?)" (25 May 2025) — 607960433LinqAlpha.PDF
[9][12] CATL Investor Relations Event Log — Earnings Call (26 Jul 2024) — ticker 300750
[10][11] CATL Record of Investor Relations Activities — Earnings Call (2 Jul 2024) — ticker 300750

## Citations

- [1] **607961671LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961671LinqAlpha.PDF>
- [2] **607961671LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961671LinqAlpha.PDF>
- [3] **607961671LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961671LinqAlpha.PDF>
- [4] **607959766LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607959766LinqAlpha.PDF>
- [5] **607959766LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607959766LinqAlpha.PDF>
- [6] **607959766LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607959766LinqAlpha.PDF>
- [7] **607959766LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607959766LinqAlpha.PDF>
- [8] **607961671LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961671LinqAlpha.PDF>
- [9] **Investor Relations Event Log - July 26, 2024** · external
- [10] **Record of Investor Relations Activities on July 2, 2024** · external
- [11] **Record of Investor Relations Activities on July 2, 2024** · external
- [12] **Investor Relations Event Log - July 26, 2024** · external
- [13] **607960627LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960627LinqAlpha.PDF>
- [14] **607956446LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956446LinqAlpha.PDF>
- [15] **607956446LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956446LinqAlpha.PDF>
- [16] **607960433LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607960433LinqAlpha.PDF>
- [17] **607960627LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960627LinqAlpha.PDF>
- [18] **607960627LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960627LinqAlpha.PDF>

