Goldman Sachs upgrades Lead Intelligent A-shares to Buy, citing the upcycle in battery equipment and ESS demand supporting 23% target price upside

Overview

This is a rating change report by Goldman Sachs on Lead Intelligent (300450.SZ). The core conclusion is that the A-share valuation has become more attractive, with the target price implying about 23% upside, and therefore the rating is upgraded from Neutral to Buy; the Buy rating on H-shares is maintained. Goldman Sachs believes the company’s core battery equipment business remains resilient, with ESS demand as well as sodium battery and all-solid-state battery equipment providing medium- to long-term growth catalysts, while improved equipment acceptance will drive margin recovery.

Core views

Goldman Sachs is positive on Lead Intelligent along three main lines: first, the core battery equipment business benefits from an acceleration in near-term battery capex, and this cycle is driven by capacity expansion from leading customers and stricter capacity utilization constraints, which may make it more sustainable than in 2022; second, ESS orders are becoming a key source of growth, with 2026E ESS orders expected to grow about 2.5x YoY and significantly increase their order mix over the medium term; third, the company is expanding into equipment related to sodium batteries, all-solid-state batteries, 3C consumer electronics, and humanoid robots, which is expected to form a second growth curve.

Analysis framework

The report mainly uses a combination of top-down industry cycle judgment and bottom-up company earnings forecasts, focusing on battery capex, ESS order mix, equipment acceptance pace, gross margin/net margin recovery, and new business expansion. In terms of valuation, Goldman Sachs applies 30x 2027E P/E to A-shares and 24x 2027E P/E to H-shares, and incorporates a 20% valuation discount for H-shares relative to A-shares.

Methodology notes

• Valuation methods2027E P/E

  Target price is based on forward price-to-earnings multiples

  The 12-month A-share target price of Rmb61.0 is based on 30x 2027E P/E; the H-share target price of HK$55.6 is based on 24x 2027E P/E and reflects a 20% H-share discount.

• Factor analysisGS Factor Profile

  Comparison of growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs’ factor framework compares the stock against the market and industry peers across growth, financial returns, valuation multiples, and composite indicators.

• M&A scenarioM&A Rank

  M&A probability score

  Goldman Sachs assigns Lead Intelligent an M&A Rank of 3, representing a low probability of being acquired, and this is usually not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Lead Intelligent A-shares (300450.SZ)

  Core covered asset, rating upgraded

  Strengths

  More attractive valuation, with the target price implying 23% upside; strong core battery equipment business, with ESS, sodium batteries, and FSSB providing growth catalysts.

  Weaknesses

  Orders still depend significantly on capex in power batteries and ESS, and margin recovery requires improvements in equipment acceptance and capacity utilization to materialize.

  Comparison

  Goldman Sachs believes its upside is better than the average downside of about -8% for the China Industrial Tech coverage universe.

  Risks

  A decline in EV demand, ESS capacity expansion below expectations, and slower-than-expected expansion in new businesses.

• Lead Intelligent H-shares

  H-shares of the same company, Buy maintained

  Strengths

  Also benefits from improving fundamentals and expansion in new businesses, with a target price of HK$55.6.

  Weaknesses

  Valuation includes a 20% H-share discount relative to A-shares.

  Comparison

  The H-share target price uses 24x 2027E P/E, lower than the 30x for A-shares.

  Risks

  Shares the same fundamental risks as A-shares and is also affected by changes in the H/A discount.

Key data

• Rating changeA-shares upgraded from Neutral to Buy; H-shares maintained at BuyThe rating change is mainly driven by valuation attractiveness and improved risk-reward.
• Target priceA-shares Rmb61.0; H-shares HK$55.612-month target prices, based on 2027E 30x/24x P/E respectively.
• Implied upsideAbout 23% for A-sharesBoth the report title and body emphasize that the A-share target price implies 23% upside.
• Revenue/Net profit CAGR28%/34% respectively for 2026E-2030EGrowth comes from the recovery in battery capex, ESS demand, sodium batteries, and all-solid-state batteries, among others.
• ESS order growthAbout 2.5x YoY in 2026EGoldman Sachs expects ESS to become an important driver of core business orders.
• Margin recoveryGPM/NPM improve from about 33%/11% in 2025 to about 37%/15% by 2030ERecovery is driven by resumed equipment acceptance, improved capacity utilization, and operating leverage.
• Global market shareAbout 25% in intelligent lithium battery equipmentThe report states that the company holds a leading global position in intelligent lithium battery equipment.
• Market capitalization/Enterprise valueMarket cap Rmb82.8bn/US$12.2bn; enterprise value Rmb79.8bn/US$11.8bnFrom the summary on the front page of the report.

Impact & implications

If Goldman Sachs’ view materializes, Lead Intelligent’s investment thesis will expand from a pure power battery equipment cycle to a combination of an ESS-driven equipment upcycle, margin recovery, and growth from new businesses. The rating upgrade indicates that the current A-share valuation has become more attractive relative to its growth and peer returns, but investment outcomes still depend heavily on EV demand, the pace of ESS capacity expansion, and commercialization progress in new businesses.

Risks

• A more severe slowdown in EV development in China and globally could affect demand for power battery capacity and equipment orders.
• ESS capacity expansion may progress more slowly than expected, potentially dragging on revenue, net profit, and cash collection.
• Expansion in new businesses such as photovoltaics, consumer electronics, and humanoid robots may be slower than expected, weakening the second growth curve.
• Improvements in equipment acceptance, UTR, and customer capacity expansion discipline may fall short of expectations, potentially leading to weaker-than-expected recovery in gross and net margins.

What to watch

• Order growth in 2Q26 and beyond, especially whether ESS orders continue their strong growth.
• Whether the order mix between ESS and power batteries converges toward approximately 50/50.
• The recovery in customer equipment acceptance and capacity utilization, and whether gross margin rebounds toward the roughly 40% level implied by contracts.
• Order ramp-up for sodium battery and all-solid-state battery equipment, as well as progress in related demand from customers such as CATL.
• Commercialization milestones for 3C structural component equipment and humanoid robot assembly equipment.