Has CATL’s crown slipped? Its A- and H-share prices have both been cut in half. Behind it lies the harsh reality of a “valuation reset”!
CATL’s latest third-quarter results have pulled away the curtain on its high-growth story, revealing a glaring case of rising revenue but stagnant profit: Q3 revenue surged nearly 59%, while net profit eked out just 14.5% growth. Gross margin also hit a two-year low.
CATL’s profits are being mercilessly squeezed by three blades:
• Bulk deliveries of low-priced energy-storage orders
• The state’s reinstatement of a 2% battery consumption tax
• Inventory write-downs caused by lithium carbonate price fluctuations
But these are only superficial wounds. What’s really shaking CATL’s foundations is the collective “betrayal” of its partners. Automakers have had enough of CATL! Giants including Li Auto, XPeng, and Geely are speeding up in-house battery development or bringing in a “second supplier.” Their core aim is to break CATL’s dominance, demote it from a “must-have” to an “option,” and ruthlessly erode its pricing power. Add to that a weaker-than-usual October production peak and an industry-wide trend toward EV penetration reaching its ceiling, and the era of making huge profits with little effort is gone for good.
Although its 645 billion yuan in profit over the first three quarters still dwarfs most A-share companies, and its forward P/E has been battered down to just 12, the market is trading on the end of the “high-growth myth.” If gross margin keeps bleeding in the fourth quarter, CATL may find it hard to stage a comeback on investor faith alone.
#FollowEachOther# #FollowBackEveryone#
CATL’s latest third-quarter results have pulled away the curtain on its high-growth story, revealing a glaring case of rising revenue but stagnant profit: Q3 revenue surged nearly 59%, while net profit eked out just 14.5% growth. Gross margin also hit a two-year low.
CATL’s profits are being mercilessly squeezed by three blades:
• Bulk deliveries of low-priced energy-storage orders
• The state’s reinstatement of a 2% battery consumption tax
• Inventory write-downs caused by lithium carbonate price fluctuations
But these are only superficial wounds. What’s really shaking CATL’s foundations is the collective “betrayal” of its partners. Automakers have had enough of CATL! Giants including Li Auto, XPeng, and Geely are speeding up in-house battery development or bringing in a “second supplier.” Their core aim is to break CATL’s dominance, demote it from a “must-have” to an “option,” and ruthlessly erode its pricing power. Add to that a weaker-than-usual October production peak and an industry-wide trend toward EV penetration reaching its ceiling, and the era of making huge profits with little effort is gone for good.
Although its 645 billion yuan in profit over the first three quarters still dwarfs most A-share companies, and its forward P/E has been battered down to just 12, the market is trading on the end of the “high-growth myth.” If gross margin keeps bleeding in the fourth quarter, CATL may find it hard to stage a comeback on investor faith alone.
#FollowEachOther# #FollowBackEveryone#