Citi raises CATL target to HKD888 on record battery demand outlook

Citi raised CATL's H-share target to HKD888, forecasting net profit of RMB103 billion in fiscal 2026 after the battery maker reported first-quarter results.

"CATL's battery production and shipments should remain strong in the second half, with energy storage demand as a key highlight," the Citi analyst team said in a note dated June 4. The broker also noted that lithium carbonate prices above RMB200,000 per ton would not destroy demand in the short term, with higher prices instead pointing to resilient demand.

The broker raised its FY2026-28 earnings forecasts by 9 percent, 9 percent and 7 percent to RMB103 billion, RMB126 billion and RMB149 billion, respectively. It expects battery production and sales to reach 1.2 terawatt-hours and 1.0 TWh in fiscal 2026, representing year-over-year growth of 61 percent and 54 percent. For the second quarter, Citi estimates net profit of RMB24.3 billion on battery sales of 260 gigawatt-hours, up 77 percent from a year earlier and 29 percent sequentially.

The upgrade implies a 28 percent premium over CATL's A-shares, reflecting its scarcity value as a global battery leader in offshore markets. Citi maintained its Buy rating and listed the stock as the sector's top pick. The A-share target was also raised to RMB603 from RMB576.

The raised forecasts point to management's confidence in accelerating global electrification demand, benefiting the broader battery supply chain including lithium producers and EV makers such as BYD Co. and LG Energy Solution. Investors will watch for CATL's second-quarter results and any updates on energy storage contracts, which Citi identified as a key growth driver for the second half.

This article is for informational purposes only and does not constitute investment advice.