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2026-10-26 11:27:07 DBS issued a research report expecting CATL (03750.HK) (300750.SZ)'s profitability to weaken due to higher tax rates, with unit profit expected to decline QoQ. However, it believes the company's long-term growth potential remains intact and maintained its Buy rating. The broker lowered its Hong Kong-listed shares TP from HKD736 to HKD695, while the A-share TP was cut from RMB484 to RMB438. It also reduced its EPS forecast for next year from RMB24.2 to RMB21.9. The broker noted that the company's 3Q revenue reached RMB165.2 billion, up 58.6% YoY and 11.8% QoQ. Battery shipments exceeded 260GWh, up 58% YoY and 12% QoQ. Gross margin fell 5.1 ppts YoY and 2.5 ppts QoQ to 20.7%, while attributable net margin declined 4.9 ppts YoY and 2.4 ppts QoQ to 12.9%. Attributable profit rose 14.5% YoY but fell 5.8% QoQ to RMB21.2 billion, with unit profit down 16% QoQ to RMB0.082 per watt-hour, below market expectations. The weakness was mainly due to increased tax-rate pressure and a lower-end product mix. The export VAT rebate rate for battery products was reduced from 9% to 6% starting April this year, with the adverse impact mainly reflected in 3Q. The 2% battery consumption tax effective from September this year was largely absorbed by battery manufacturers through tax-inclusive pricing as renegotiations with customers had not been completed in time. DBS expected industry profitability to remain under pressure next year as China's export tax rebate for batteries will be reduced from 6% to zero in 2027, while the battery consumption tax will further increase to 4% in September 2027. Pressure on unit profit may persist. However, the company continues to target shipment growth of 20% to 30% YoY by 2027 and expects sales expansion to remain steady through 2030. Stronger-than-expected overseas demand for EV and energy storage batteries, along with continued shipment growth, should partially offset declining unit profit. AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |