The Kedali management meeting signaled strong growth momentum, and UBS maintained Buy with a target price of Rmb268.00

Overview

This report is a summary of the Kedali management investor meeting organized by UBS. Company secretary Ms. Luo provided a positive outlook for battery structural components and robotics business: EV battery production scheduling is stable, overseas energy storage battery demand is growing rapidly supported by policy and power shortages, and the company is expanding capacity to meet orders. At the same time, the European bases are expected to deliver significant revenue growth and reach breakeven in 2026, while the robotics reducer business is also progressing smoothly at both customer and product levels.

Core views

The core view is that Kedali remains on a strong growth path. The battery structural components business benefits from demand for power batteries and energy storage batteries, with production scheduling expected to grow more than 40% year-on-year in 2026, and revenue expected to grow 30%-40% year-on-year; 2026-2030 battery structural component revenue CAGR is expected to exceed 30%. The profit drag from higher aluminum prices is expected to be limited; the company expects to buffer pressure through pass-through to downstream customers and internal cost control, and the pricing increase could be implemented in Q2 2026. Profitability leverage is high when utilization improves at European capacity, and management said if utilization reaches 60%, net margin at European bases could rise to 10%-15%.

Analysis framework

The report is mainly based on management meeting discussions, the company’s order and capacity guidance, overseas capacity ramp-up assumptions, UBS profit forecasts and valuation framework, and evaluates stock returns through consensus expectations and a 12-month rating framework.

Methodology notes

• Valuation and ratingUBS 12-month rating framework

  Comparing expected stock returns with market return assumptions

  UBS defines expected stock return as the sum of the expected share price appreciation over the next 12 months plus dividend yield. A Buy rating generally corresponds to expected stock returns exceeding the market return assumption by more than 6 percentage points.

• Operational analysisManagement meeting minutes

  Using management guidance to assess revenue growth, margin pressure, and new business breakthroughs

  The report derives its investment conclusion from management statements on battery structural component capacity scheduling, revenue growth, raw material price pass-through, European base breakeven progress, and robotics reducer progress.

Asset mapping & comparison

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

• Shenzhen Kedali Industry (002850.SZ)

  Covered security in this report; UBS maintained a Buy rating and an Rmb268.00 target price.

  Strengths

  Battery structural component demand is strong; customers include CATL, BYD, CALB, EVE Energy, Panasonic, LG Chem, and Northvolt. European capacity ramp-up and the robotics reducer business provide incremental upside in the mid-term.

  Weaknesses

  Overseas revenue share in 2025 remains below 5%, and margin improvement at European bases depends on higher utilization; rising raw material prices require pricing pass-through and cost control.

  Comparison

  UBS 2026-2028 EPS forecasts are all above consensus, at Rmb8.97, Rmb12.39, and Rmb15.93 respectively.

  Risks

  Slower-than-expected build-out and commissioning of capacity, slower-than-expected expansion by major customers, significant customer share loss at key customers, product quality issues, upstream structural component price pressure from battery manufacturers, rising prices of key raw materials such as copper and aluminum, a decline in passenger vehicle sales due to macro weakness, and trade frictions.

Key data

• 12-month ratingBuyUBS maintained a Buy rating.
• 12-month target priceRmb268.00The report kept the target price unchanged.
• Current priceRmb206.00Price date is 8 May 2026.
• Expected price upside30.1%Calculated based on current price and target price.
• Expected dividend yield1.7%From the report's expected return table.
• Expected total stock return31.8%Includes both price upside and dividend yield.
• Market valueRmb56.6b / US$8.33bTrading data and key metric disclosure in the report.
• Free float ratio66%Trading data and key metric disclosure in the report.
• 2026E UBS EPSRmb8.97Above consensus estimate of Rmb8.61.
• 2027E UBS EPSRmb12.39Above consensus estimate of Rmb11.06.
• 2028E UBS EPSRmb15.93Above consensus estimate of Rmb13.51.
• 2026 battery structural components revenue growth guidance30%-40% YoYManagement meeting guidance.
• 2026-2030 battery structural components revenue CAGR guidance>30% CAGRBased on customer order guidance and demand assessment.
• 2026 battery structural components production growth expectation>40% YoYManagement inference based on customer order guidance.
• 2025 overseas revenue share<5%Management disclosed overseas business is still at an early stage.
• Potential net margin for European base10%-15%Assumes utilization reaches 60%.

Impact & implications

If management guidance is achieved, Kedali’s growth will be driven not only by domestic power battery structural components but also by overseas energy storage demand, localised European capacity, and the new robotics reducer business. UBS’s EPS forecasts above consensus reflect confidence in medium-term growth and margin recovery; however, raw material prices, customer expansion pace, product quality, and trade frictions could still affect valuation realization.

Risks

• Capacity construction and commissioning at the company are slower than expected.
• Capacity expansion by key customers is slower than expected.
• Material and meaningful share losses occur at major customers.
• Product quality issues affect customer relationships or deliveries.
• EV penetration growth is weaker than expected.
• Battery makers exert strong price pressure on upstream structural component suppliers.
• Competitor capacity additions lead to loss of market share.
• Major raw materials such as copper and aluminum rise in price.
• Passenger vehicle sales decline due to macroeconomic softening.
• Trade frictions affect import and export of components.

What to watch

• Whether 2026 battery structural component production scheduling and revenue growth reach management guidance.
• Post-aluminum-price increase customer price negotiations and implementation of price hikes in Q2 2026.
• The growth pace of revenue, breakeven progress, and utilization improvement at the three European production bases.
• European battery customer demand and order pull from CATL’s plant in Hungary.
• Whether the robotics reducer business achieves breakthroughs at key customers.
• Whether downstream BESS demand continues to outperform expectations.
• Whether quarterly performance exceeds market expectations.