3750 Post-Earnings Analysis | CATL's Q4 Profit Exceeds Expectations; Broker: Eases Concerns Over Lithium Cost Increase

Electric vehicle battery leader 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 raised 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 improvements in both 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 volume is expected to exceed 20%.

Product Portfolio Optimization Offsets Lithium Carbonate Price Rise

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

The report states that net profit per GWh is expected to remain stable, mainly benefiting from improved supply and demand 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 concerns about rising raw material and lithium costs had slowed CATL’s stock price rally since Q4, but believes that the solid quarterly results and management’s positive guidance on margins and demand can ease investor worries and positively impact the stock.

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, it believes CATL’s technological leadership demonstrates resilience in profitability, reaffirming it as China’s top choice in battery manufacturing.

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.