CICC has initiated coverage on CATL (03750.HK) with an Outperform industry rating and a target price of HK$580, implying a 14.9% upside based on 26.5X 2026 P/E. The firm expects CATL's EPS to reach RMB15.27 in 2025 and RMB19.74 in 2026, with a 2024-2026 CAGR of 31.6%. Currently, the H-shares trade at 23.1X 2026 P/E.

For its A-shares (300750.SZ), CICC maintains an Outperform rating and RMB445 target price (19.0% upside), reflecting 23.1X 2026 P/E versus current 19.4X. Key highlights:

1. **Global Expansion Leadership**: CATL is well-positioned to capture overseas growth in NEV and energy storage markets, particularly as localization policies and geopolitical factors drive Chinese battery makers' global capacity deployment. Its international production is expected to ramp up between 2025-2027.

2. **Emerging Applications Driving Demand**: New lithium battery use cases (electric aircraft, marine vessels, construction machinery, data centers) present sustained demand growth with higher technical barriers. CATL leads in product development for these segments.

3. **Sustainable Competitive Edge**: Since 2022, CATL has maintained industry-leading profitability through strong supply chain bargaining power, optimized client/product mix, and high equipment utilization. Its full-industry-chain R&D keeps technological leadership.

4. **Robust Financials**: Conservative accounting practices (depreciation, sales/service provisions, impairment reserves) create solid earnings buffers. Potential reserve reversals could boost future profits. The company maintains high dividend payouts since 2023.

**Investment Thesis**: While market concerns persist about mid-term market share stability, CICC believes CATL's global expansion and scale advantages will sustain its position. Pricing power, product/client optimization, and premium new products should support steady profit growth. Potential catalysts include stronger-than-expected NEV/energy storage demand and earnings outperformance.