UBS raises CATL target price to Rmb600 and reiterates Buy

Overview

This is a company research and rating change report by UBS on CATL. Against the backdrop of slowing growth in China's EV market, the report emphasizes that CATL still has the structural ability to outperform and raises the target price to Rmb600. UBS believes CATL will benefit from a higher mix of premium models and large SUVs, rising battery capacity per vehicle, a higher installation probability in export models, share advantages in Europe, faster commercial vehicle electrification, and expanding energy storage demand.

Core views

UBS's core view is that even if domestic EV sales in China face short-term pressure, CATL can still expand share through its customer mix, technology leadership, and global certification advantages. In 1Q26, domestic passenger EV sales declined, but segments such as large SUVs, export EVs, electric heavy trucks, and energy storage were stronger, and these areas typically use larger battery packs or are more likely to adopt CATL products. The report forecasts CATL's 2026E sales growth at 50% and believes its profit per unit can remain relatively stable despite raw material volatility.

Analysis framework

The report combines top-down industry demand analysis with bottom-up estimates of company share and earnings: it first analyzes changes in China's passenger vehicle mix, exports, European EVs, commercial vehicle electrification, and energy storage demand, then maps these to CATL's sales, ASP, gross margin, and profit per unit forecasts, and finally derives the target price using 2027E P/E and A/H-share valuation differences, while presenting upside, base, and downside scenarios.

Methodology notes

• Valuation methodsPE multiple valuation

  P/E valuation

  UBS values the company based on 2027E P/E. The base-case target price of Rmb600 corresponds to about 22x 2027E P/E and also considers the discount or premium relationship versus H-shares.

• scenario_analysisupside/base/downside spectrum

  Scenario analysis

  The report presents an upside scenario of Rmb800, a base scenario of Rmb600, and a downside scenario of Rmb300. Key variables include battery sales, profit per unit, global EV penetration, energy storage orders, and cost control.

• industry_analysissegment demand decomposition

  Segment demand breakdown

  The report breaks down growth drivers by passenger EV batteries, commercial vehicle batteries, and energy storage batteries to assess whether CATL can achieve sales growth above the industry level.

Asset mapping & comparison

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

• CATL-A / 300750.SZ

  Core covered name

  Strengths

  Technology leadership, a comprehensive product portfolio, rising domestic and overseas share, strong ESS and commercial vehicle demand, and profitability and ROE superior to peers.

  Weaknesses

  Intense price competition in domestic ESS orders, potential cost pressure from overseas capacity expansion, and slowing growth in domestic passenger EVs.

  Comparison

  The report states that CATL-A trades at about 16x 2027E P/E based on UBS estimates, below the domestic battery maker average of about 26x, and at about a 40% discount to CATL-H.

  Risks

  Geopolitics, tariffs, peer price competition, overseas governments or major customers building their own battery capacity, and technological disruption.

• CATL-H

  Valuation reference asset

  Strengths

  Stronger valuation supported by overseas investor enthusiasm and tight H-share supply.

  Weaknesses

  Higher valuation relative to A-shares.

  Comparison

  UBS considers A/H-share valuation differences in its target price framework and points out that A-shares trade at about a 40% discount to H-shares.

  Risks

  If the H-share premium narrows, the A/H valuation reference may change.

• ESS battery segment

  Growth-driving business

  Strengths

  Rapid global demand growth; CATL's global ESS battery shipment share was about 30% in 2025, with a clear leadership advantage.

  Weaknesses

  The U.S. market faces geopolitical and regulatory constraints, and Chinese manufacturers may find it difficult to secure meaningful incremental gains.

  Comparison

  Excluding the United States, UBS expects ESS battery demand to grow 63% in 2026E, with a 38% CAGR over the next five years.

  Risks

  Price competition, regional policy restrictions, and slower-than-expected energy storage project construction.

Key data

• Target priceRmb600.00Raised from Rmb500.00 to Rmb600.00.
• Current priceRmb434.88As of April 27, 2026.
• RatingBuy12-month rating; UBS reiterates Buy.
• 2026/27E earnings upgrade14% / 13%UBS raised its 2026E and 2027E earnings forecasts.
• 2026E battery sales forecast990GWhUBS forecasts 50% YoY growth, above the VisibleAlpha consensus of 883GWh and 33% YoY growth.
• 1Q26 deliveriesmore than 200GWhCATL reported battery deliveries up 61% YoY.
• China domestic installed share48%Up 3.4 percentage points YoY in 1Q26.
• Overseas EV battery share32.1%Up 2.2 percentage points YoY in the first two months of 2026.
• Average battery capacity per vehicleabout 68-69kWh1Q26 or March level, above the 56kWh full-year 2025 level.
• BESS demand excluding the United States2026E growth 63%, next 5 years CAGR 38%UBS's forecast for energy storage battery demand.
• Global ESS shipment shareabout 30%In 2025, CATL maintained its global ESS shipment leadership for the fifth consecutive year.
• Base-case profit per unit2026E Rmb105/kWh; 2027E Rmb103/kWhUBS believes scale effects, efficiency gains, and cost control can support stable profit per unit.

Impact & implications

From an investment perspective, the report positions CATL as a key beneficiary of expanding demand for EV and energy storage batteries. UBS believes the market has not fully reflected its sales potential and profit resilience, especially given that the A-share trades at about a 40% discount to the H-share and that its 2027E P/E is below the average level of domestic battery peers. If UBS's forecasts materialize, the main share price upside would come from better-than-expected sales, earnings upgrades, and valuation rerating.

Risks

• Geopolitics and arbitrary tariffs may affect exports.
• Price competition among peers to gain share may compress margins.
• Foreign governments or major customers may promote local battery production, weakening CATL's external supply opportunities.
• Commercialization of new technologies may fall short of expectations or technological disruption may emerge, changing the competitive landscape.
• EV penetration may come in below expectations, especially under weak consumer sentiment.
• If rising raw material costs cannot be passed through smoothly, net profit per kWh may come under pressure.

What to watch

• Whether CATL can achieve about 990GWh of battery sales and 50% YoY growth in 2026.
• Whether the mix of large SUVs, higher-priced models, and export EVs in China continues to increase.
• Whether domestic installed share and overseas market share can be maintained or further expanded.
• The pace of commercial vehicle electrification, including electric heavy trucks and buses.
• Growth in ESS orders, price competition, and delivery of ex-U.S. energy storage demand.
• The effectiveness of raw material prices, pricing adjustment mechanisms, and commodity hedging in protecting profit per unit.
• Whether European factory costs, automation levels, and price premiums can offset rising overseas production costs.