Zhi Tong Cai Jing·2026-01-19 06:53Core Viewpoint - Citigroup's report indicates that CATL (300750) faces multiple headwinds entering 2026, raising investor concerns about its growth prospects, including a slowdown in Chinese electric vehicle sales, rising lithium prices, and a reduction in battery export VAT rebates. However, the firm maintains a "highly confident outperform" rating for CATL's A/H shares with a target price of 685 RMB / 500 HKD [1]. Group 1 - The slowdown in Chinese electric vehicle sales is already anticipated in market expectations and reflected in growth forecasts, thus not surprising the market as negative news [1]. - Strong growth momentum in energy storage batteries is expected to partially offset the negative impact from the slowdown in electric vehicle batteries [1]. - CATL indicated during a company visit in November that battery shipments in Q1 2026 may remain flat compared to the previous quarter, implying a year-on-year growth rate of 60% [1]. Group 2 - Citigroup estimates that the reduction in battery export VAT rebates will have a negligible impact on CATL's profitability, approximately 2%, suggesting that this policy should not affect China's battery exports [2]. - CATL's A/H shares are currently trading at a projected P/E ratio of 17x/22x for 2026, which Citigroup believes reflects most of the market's concerns [2]. - With a forecasted compound annual growth rate of 31% in earnings per share from 2025 to 2027, the risk-reward profile for CATL appears attractive [2]. - Historically, CATL's A shares traded at an average P/E ratio of 19x from 2022 to 2025 during a down cycle in the battery industry, and with a new upcycle driven by structural growth in energy storage batteries approaching, a revaluation above the historical average is warranted [2].