Macquarie has raised its target price for CATL (03750) from HK$680 to HK$700, reiterating an 'Outperform' rating.

The brokerage noted that while softening domestic electric vehicle (EV) demand weighs on sentiment, CATL can offset the impact by increasing battery installations per vehicle and passing on costs. Although Macquarie cut its 2026 fiscal year earnings forecast by 9%, it rolled its valuation base to 20 times the 2027 fiscal year earnings per share. Considering the share supply-demand situation, it also raised the H-share premium from 20% to 25%.

CATL is set to announce its second-quarter 2026 results after the market close on Friday (24th). Due to slowing battery electric vehicle (BEV) demand and sharp fluctuations in raw material costs, Macquarie expects the second-quarter earnings to face short-term pressure. The firm forecasts second-quarter deliveries will be flat quarter-on-quarter at 202 GWh, 9% below the market consensus. Revenue is expected to be RMB 139.1 billion, 6% lower than market expectations. Gross margins are also expected to be under pressure due to weakening demand for NCM (Nickel-Cobalt-Manganese) batteries and intensifying competition in the energy storage system market.