[Post-3750 Performance Analysis] CATL's Q4 profit exceeds expectations; broker: easing concerns over lithium cost increases

Electric vehicle battery leader Contemporary Amperex Technology Co. Limited (CATL) (Shenzhen: 300750) (03750) announced its Q4 results, with revenue of 140.629 billion yuan (RMB, same below), up 34.98% year-on-year; net profit of 23.167 billion yuan, up 24.9% quarter-on-quarter, beating market expectations.

Dahua JiXian Raises Target Price and Maintains “Buy” Rating

Dahua JiXian maintains a “Buy” rating for CATL, with target prices raised to 580 RMB for A-shares and 655 HKD for H-shares. The report mentions that, based on sales growth, the company has upwardly revised its net profit forecasts for 2026-2027 by 6% and 15%, respectively, to 84.06 billion yuan and 108.8 billion yuan; additionally, it has issued its first forecast for 2028 net profit at 136 billion yuan.

Dahua JiXian states that CATL’s Q4 2025 profits exceeded expectations, mainly due to increases in sales volume and profit margins; accelerating electrification in areas such as electric vehicles, energy storage systems, robotics, and data centers, along with the company’s strong product lineup, will drive profit growth. The compound annual growth rate of sales is expected to exceed 20%.

Product Portfolio Optimization Offsets Lithium Carbonate Price Rise

Dahua JiXian maintains its forecasts for CATL’s net profit per gigawatt-hour at 105 million yuan and 110 million yuan for 2026-2027, respectively, and expects 112 million yuan per gigawatt-hour in 2028.

The report states that net profit per gigawatt-hour is expected to remain stable, mainly benefiting from improved supply-demand dynamics for lithium-ion batteries, stable pass-through of raw material costs, and product mix optimization—such as increasing sales proportions of high-value products like Shenxing PRO and Kirin batteries—thus offsetting the impact of rising lithium carbonate prices. Additionally, overseas production has achieved profit margins comparable to domestic levels through European premiums and automation.

JPMorgan’s Outlook Eases Investor Concerns

JPMorgan reiterates an “Overweight” rating for CATL, with a target price of 640 RMB. The bank notes that earlier market concerns over rising raw material and lithium costs had slowed CATL’s stock price rally since Q4. However, JPMorgan believes that the solid quarterly results and management’s positive guidance on profit margins and demand can ease investor worries, likely leading to a positive market reaction.

JPMorgan also highlights confidence in CATL’s technology and its leadership position in the global electric vehicle and energy storage battery markets. Despite ongoing pricing pressures in the supply chain, JPMorgan believes CATL’s technological leadership demonstrates resilience in profitability, reaffirming it as the top choice among Chinese battery manufacturers.

For the full year, CATL reported revenue of 423 billion yuan, up 17.04% year-on-year; net profit of 72.201 billion yuan, up 42.28%; basic earnings per share of 16.14 yuan; and a cash dividend of 69.57 yuan per 10 shares, equivalent to 6.957 yuan per share.