CATL's earnings surpass expectations, triggering a surge in stock price. H-shares have risen over 16% in the past three days.

China Securities Journal, March 11 (Editor: Hu Jiarong) - Lithium battery stocks continued their rally today. As of the latest report, CATL (03750.HK) rose 8.91%, Cakex New Energy (01986.HK) increased 7.06%, and Zhongchuang Hang (03931.HK) gained 7.01%.

From the chart above, CATL performed notably well, with an early session increase of over 8%, and a total rise of more than 16% over the past three trading days.

According to CATL’s latest financial report, in Q4 2025, net profit attributable to shareholders reached 23.167 billion yuan, a significant year-over-year increase of 57.1%, and a quarter-over-quarter growth of 25%. This far exceeded market expectations of 19.6 billion yuan and marked the largest year-over-year increase in two and a half years. For the full year, net profit attributable to shareholders was 72.2 billion yuan, up 42.28% year-over-year, with profit growth far surpassing the 17% revenue growth, highlighting continuous improvement in profitability quality.

The main drivers of the high profit increase include scale effects, deeper cost reductions through technological innovation, and an increased proportion of high-value-added products. Amid intensifying industry competition, the company has achieved a virtuous cycle of “more revenue and more profit” through structural optimization and operational efficiency improvements.

Additionally, during the earnings briefing on March 9, CATL’s management disclosed that the lithium mine in Yichun, Jiangxi, had obtained a mining license by the end of 2025 and is currently advancing the restart approval process.

The Snowway lithium project has completed preliminary work such as safety and environmental assessments. Although approval cycles are lengthy, the mine’s high-grade resources and cost advantages are significant, and its economic benefits post-operation are promising.

Several international investment banks quickly released updated research reports on CATL following the earnings release, all optimistic about its future prospects:

HSBC Qianhai: Target price of HKD 648, current price HKD 593, implying about 9.3% upside.

JPMorgan Chase: Target price of HKD 640, based on a 29x forecasted P/E ratio for 2026, maintaining an overweight rating.

Jefferies: Earnings forecasts for 2026-2028 have been raised by 5% to 6%, emphasizing high visibility of long-term growth.

Risk mitigation: Improved cost transmission mechanism confirms profit stability

In response to previous market concerns that “rising lithium prices could erode profits,” CATL’s management explicitly stated: “Under normal circumstances, unit net profit is expected to remain stable in 2026.” JPMorgan and other institutions highlighted this statement in their research reports, significantly boosting investor confidence.

Meanwhile, CATL pointed out that the company has established a comprehensive cost linkage system: long-term contracts with customers adopt a lithium carbonate price-linked pricing model, allowing cost fluctuations to be smoothly transmitted.

The upstream lithium resource layout has formed an endogenous hedging capability, making preparations more robust than during the last lithium price cycle. HSBC Qianhai noted that if the Yichun lithium mine restarts smoothly, it will further strengthen cost control barriers and enhance profit certainty.