Citi has released a research report cutting the H-share price targets for CALB (03931) and CATL (03750), while maintaining a "Buy" rating on both, according to an announcement.

The target price for CALB was lowered from HK$40.9 to HK$33.1, and the H-share target price for CATL was reduced from HK$888 to HK$765. The A-share target price for CATL (300750.SZ) was cut to RMB 500.

The bank believes that as battery capacity catches up with demand, the industry will enter a downcycle, but overall utilization rates across the battery supply chain remain stable, and the supply-demand landscape will be relatively balanced, suggesting conditions are not as pessimistic as the market expects.

In the bank's view, future opportunities will be more focused on valuation and individual companies. Its cross-sector top picks include CATL A-shares, CALB, EVE Energy, LG Energy Solution, Kedali, Hunan Yuneng, and Panasonic.

The bank noted that the cut in CALB's target price mainly reflects a reduction in the 2026 forecast price-to-earnings valuation multiple from 22.2 times to the industry average of 18 times. The lowering of CATL's H-share target price is primarily due to the decline in its A-share target price, now based on the company's historical average of 15.7 times 2026 EV/EBITDA multiple, down from 17.5 times previously.