CLSA has reiterated its "High Conviction Outperform" rating on CATL (03750) and (300750.SZ), with target prices set at HK$710 and RMB 505, respectively. Following the announcement of robust Q4 2025 results for the H-shares, which surged 33% over the past week, the premium of H-shares over A-shares widened to a record high of 45%. Investors have largely set aside major concerns from earlier this year, and the firm expects these issues to gradually improve throughout the remainder of the year. Despite the recent share price increase, CLSA maintains a positive outlook on CATL. The next key date will be the release of CATL's Q1 2026 results at the end of April. CLSA estimates that Q1 2026 gross margin may decline sequentially by 1 to 2 percentage points due to delayed cost pass-through, but strong battery shipment volumes are expected to drive a year-on-year net profit increase of approximately 45% to RMB 20 billion. The firm believes Q1 2026 will serve as a test of battery manufacturers' ability to withstand rapid rises in raw material costs and expects CATL to demonstrate stronger cost resilience compared to its peers.