CLSA has issued a research report stating that it has lowered its price target for CATL (03750) from HK$770 to HK$670, reflecting a decline in valuation multiples for the electric vehicle battery, energy storage system, and battery materials and resources businesses. The brokerage maintained its "Outperform" rating.

The brokerage believes the market appears to have already priced in a scenario of significantly slower earnings growth for the company in 2027. However, it may not be until the first quarter of 2027 that a clearer assessment of energy storage system and EV battery demand can be made, and the share price is likely to remain range-bound until then.

CLSA noted that based on CATL's historical valuation trends, assuming a 13x forward price-to-earnings ratio represents its valuation floor, the current valuation equates to approximately 11.5x 2027 forecast P/E. The brokerage's earnings forecast is broadly in line with market consensus. Working backward from the 13x 2027 forecast P/E valuation floor, the current share price implies that the market has already factored in an approximately 12% downgrade to 2027 earnings forecasts.

The brokerage estimates that CATL's net profit for 2027 will be RMB 116 billion, representing a year-on-year increase of 20%. Under the scenario implied by the current share price, net profit would fall to RMB 102 billion, with year-on-year growth slowing to 6%. The growth slowdown reflected in the market may stem from slower demand for energy storage systems and EV batteries, as well as declining profit margins.

The brokerage believes the market appears to have already priced in a scenario of significantly slower earnings growth for the company in 2027, but it may not be until the first quarter of 2027 that a clearer picture of energy storage system and EV battery demand emerges, which could serve as a catalyst to drive the share price higher again.

The brokerage further noted that apart from the third-quarter 2026 results scheduled for release on October 20, there appear to be no other obvious positive catalysts in the near term. The standoff between bulls and bears is expected to be difficult to resolve in the short term, and the company's share price may remain range-bound until the first quarter of 2027.