CATL 2Q26 results in line with expectations; Nomura reiterates Buy and raises target price

Overview

This report is Nomura's company research and rating revision on Contemporary Amperex Technology Co Ltd (CATL, 300750.SS). The report believes the company's 2Q26 results were in line with expectations, with demand supported by rising global new energy vehicle penetration and growth in domestic and overseas energy storage installations, while the share buyback plan is positive for market sentiment and shareholder returns.

Core views

The core view is to maintain a Buy rating and raise the target price to CNY632. The report highlights that 2Q26 net profit reached CNY22.5bn, up 36% YoY and 9% QoQ, in line with market expectations; 1H26 battery shipments are estimated to have increased about 60% YoY to 430-440GWh, with 2Q26 at about 230GWh; FY26F shipments are expected to rise 51% YoY to around 1TWh, with FY27-28F still showing 19-22% growth.

Analysis framework

The report forms its investment view through earnings breakdown, segment revenue, shipment and ASP estimates, earnings forecast revisions, valuation multiples, and the impact of the share buyback. Nomura raised FY26-28F revenue and earnings forecasts while lowering gross margin assumptions to reflect stronger shipments and non-battery revenue growth, as well as material cost inflation and revenue mix changes.

Methodology notes

• Valuation methodsP/E and PEG valuation

  25x FY27F EPS and FY27F PEG

  The target price of CNY632 is based on 25x FY27F EPS of CNY25.26, corresponding to 1.25x FY27F PEG based on FY26-28F earnings CAGR of 20%.

• Earnings forecastEarnings forecast revision

  Adjustments to revenue, gross margin, and earnings forecasts

  Nomura raised FY26-28F revenue forecasts by 5.7-8.6%, lowered gross margin forecasts by 0.6-1.4 percentage points, and raised earnings forecasts for the same period by 3.3-5.3%.

Asset mapping & comparison

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

• 300750.SS / Contemporary Amperex Technology Co Ltd (CATL)

  Core covered name and a global leading lithium-ion battery manufacturer, with businesses spanning EV batteries, ESS batteries, and battery management systems.

  Strengths

  Strong battery shipment growth, demand support from global EV penetration and energy storage installations, buyback plan improving shareholder returns, and earnings forecasts revised upward.

  Weaknesses

  Gross margin is affected by material cost inflation and revenue mix changes, with 2Q26 GPM down both YoY and QoQ.

  Comparison

  The report uses the CSI300 as a benchmark and believes the current 18x/15x FY26/27F P/E valuation is not high.

  Risks

  Raw material price increases exceeding expectations, shipments to global OEMs falling short of expectations, and intensified competition in China and overseas markets.

Key data

• 2Q26 net profitCNY22.5bnUp 36% YoY and 9% QoQ, in line with market expectations of CNY22-23bn.
• 1H26 net profitCNY43.3bnUp 42% YoY.
• 1H26 revenueCNY277bnUp 55% YoY; 2Q26 revenue was CNY148bn, up 57% YoY and 14% QoQ.
• 2Q26 gross margin23.2%Down 2.4 percentage points YoY and 1.7 percentage points QoQ, due to material cost inflation and revenue mix changes.
• 1H26 EV/ESS battery revenueCNY192bn / CNY53bnUp 46% and 88% YoY, respectively.
• Estimated 1H26 battery shipments430-440GWhUp about 60% YoY; about 230GWh in 2Q26.
• FY26F battery shipment forecastaround 1TWhExpected to grow 51% YoY, with FY27-28F growth expected at 19-22%.
• A-share buyback planCNY20-40bnExpected to be implemented within 12 months after shareholder meeting approval, accounting for about 1.1-2.3% of the latest A-share market capitalization.
• Target priceCNY632.00Based on 25x FY27F EPS of CNY25.26.
• Current priceCNY383.01As of 2026-07-24, implied upside is +65.0%.

Impact & implications

The report's investment implication for CATL is positive overall: demand resilience, shipment growth, and the buyback plan together support valuation recovery; the current share price corresponds to 18x/15x FY26/27F P/E, which Nomura considers not demanding. However, pressure on gross margin indicates that material costs and revenue mix remain key variables for earnings elasticity.

Risks

• Raw material price increases are stronger than expected.
• Shipments to global OEM customers are lower than expected.
• Competition in China and overseas markets intensifies.
• Gross margin may continue to be affected by material cost inflation and revenue mix changes.

What to watch

• Whether the shareholder meeting approves the CNY20-40bn A-share buyback plan and the actual execution price and scale.
• Progress toward delivering the FY26F battery shipment target of around 1TWh.
• Whether EV and ESS battery revenue growth continues, and changes in overseas market demand.
• Trends in material costs and battery ASP stability.
• Achievability of FY27F EPS of CNY25.26 and FY26-28F earnings CAGR of 20%.