A stock investor only needs to read the Jinlinqi analyst research report — authoritative, professional, timely, and comprehensive, helping you uncover potential thematic opportunities. Source: Panorama Finance. On October 21, 2026, CATL (ASX: 300750) closed its A-shares at 227.90 yuan, down 12.03% in a single day, with turnover of 32.4 billion yuan and more than 100 billion yuan in market value evaporating in one day; its H-shares closed at HK$364.80, down 11.41%. From its all-time high of 467.06 yuan set on May 7, it has pulled back 51.4% in five months. The "Battery King" has been halved, and a trillion-yuan market value has vanished.
The plunge occurred after a third-quarter report that showed "revenue exceeding expectations." On the evening of October 20, the company disclosed revenue of 442.137 billion yuan for the first three quarters, up 56.19% year-on-year. Revenue is accelerating, yet the stock price is hitting new lows. The question is: is this answer sentiment, or logic?
What fell was not performance, but the quality of performance
Looking at the nature of this decline, at the 2021 high, the market gave CATL a triple-digit price-earnings ratio; in 2025 it was still around 30 times; now only 11 to 13 times remains. During the same period, the company's net profit attributable to shareholders rose from 30.729 billion yuan in 2022 to 72.201 billion yuan in 2025, more than doubling, and in the first three quarters of 2026 it earned another 64.530 billion yuan. In other words, the halving of the stock price occurred against the backdrop of continuously growing profits — this is a typical "valuation kill," not a "performance kill." A valuation-kill decline often encounters a value floor at some point; but once a valuation kill evolves into an earnings kill, that floor moves lower. After the third-quarter report, what the market fears is precisely the latter.
Take the third-quarter report apart again. Third-quarter revenue was 165.221 billion yuan, up 58.58% year-on-year, a record single-quarter high; net profit attributable to shareholders was 21.246 billion yuan, up only 14.54% year-on-year and down 5.77% quarter-on-quarter. The scissors gap between revenue and profit growth was less than 4 percentage points in the first quarter, widened to 20 percentage points in the second quarter, and exceeded 44 percentage points in the third quarter. Profitability collapsed in tandem. Third-quarter gross margin was 20.69%, down another 2.47 percentage points quarter-on-quarter, declining for two consecutive quarters and hitting a new low since the fourth quarter of 2022; the net margin attributable to shareholders was 12.86%, down 4.94 percentage points year-on-year. Compared with the full-year 2025 gross margin of 26.27% and net margin of 18.12%, in one year the gross margin fell by nearly 6 percentage points.
Even more alarming is cash. Net cash flow from operating activities in the first three quarters was 61.625 billion yuan, down 23.60% year-on-year — a rare decline since 2022. In the first half, this figure was still 60.217 billion yuan, while in the third quarter alone operating cash flow was only about 1.4 billion yuan, against net profit of 21.2 billion yuan in the same period.
Where did the profit go: a triple squeeze
The first squeeze is product mix. In the first half, the gross margin of power batteries was 20.63%, energy storage 23.96%, and materials and recycling 27.04%. Energy storage appears more profitable, but the revenue recognition cycle for energy storage systems, especially overseas AC-side projects, lasts six months to a year. The portion shipped but not yet recognized sits in inventory as "goods shipped," with impairment coming first and profit lagging.
The second squeeze is the tax burden. The consumption tax on lithium batteries will be levied at 2% from September 2026 and raised to 4% from September 2027; the export tax rebate rate for batteries will be phased down from 6% to 0% starting January 2027; the export tax rebate rate for new energy vehicles will be cut from 13% to 9% starting April 1, 2027. This is not a cyclical cost fluctuation, but a rigid, one-way, foreseeable increase in costs.
The third squeeze is the redistribution of profits in the industrial chain. Li Auto increased capital in Sunwoda Power, Xiaomi partnered with CALB, and XPeng, Leapmotor, Seres, GAC Aion, NIO Onvo, and Zeekr all introduced second suppliers. The effect is already reflected in the customer structure: Li Auto, still the largest customer in February this year, had fallen to third by June; in June, the largest customer became Geely (8.2% share), while Xiaomi and Li Auto tied for third (6.8% each). The motivation for automakers to support second-tier manufacturers is not "not using CATL," but regaining pricing power — and that is the irreversible part.
Expenses are also devouring profits. In the first half, period expenses were 18.929 billion yuan, with an expense ratio of 6.84%, up 3.84 percentage points year-on-year; administrative expenses rose 169.46% year-on-year, and R&D expenses rose 102.37%. Total employees reached 213,226, up 44.35% year-on-year, while profit per employee was 203,000 yuan, actually down 1.64% year-on-year.
The moat remains, but the moat's "rent" is falling
Looking at share, CATL still looks so solid that it hardly resembles a company being "abandoned." In the first half of 2026, global power battery installations were 242.7GWh, up 25.3% year-on-year, with a global market share of 39.9%, up 1.7 percentage points year-on-year, ranking first globally for nine consecutive years; from January to August, global market share was 39.4%; from January to May, overseas market share was 33.7%, up 3.7 percentage points year-on-year. In China, market share from January to September was 44.16%, up 1.41 percentage points year-on-year. In energy storage, first-half shipments were 125GWh, with a global share of 27.1%, also first.
Share is rising, yet "de-CATLization" is loud — the two are not contradictory, because the way share grows has changed. The key evidence is the gap between domestic and overseas gross margins: in the first half, the domestic gross margin was 21.16%, down 1.78 percentage points year-on-year; the overseas gross margin was 29.97%, nearly 9 percentage points higher than domestic. Incremental share mainly occurs in the low-margin domestic market, essentially trading price for volume. Capacity utilization climbed from about 85% in 2024 to 94.9% in the first half, and capacity under construction of 764GWh is 1.46 times the existing 525GWh — scale is reinforcing cost advantages and also locking in future depreciation.
The other side of the moat is equally real: in the same period, EVE Energy (rights protection) net profit was 3.301 billion yuan, CALB 1.523 billion yuan, Gotion High-tech 1.386 billion yuan, and Sunwoda 603 million yuan. The sum of the four is less than one-sixth of CATL's. After industry consolidation, CATL is likely to be the biggest winner — but consolidation takes one to two years, and during that time, everyone's valuation will not look good.
On the technology front, the company is not without cards: in the past decade it ranked first globally with 26,574 battery patents; the LRS (technology licensing) model lets it collect patent licensing and technical service fees without spending money or taking equity, turning technology into light-asset cash flow; energy storage cells have iterated from 314Ah to 587Ah, sodium batteries have entered high-cold and high-frequency scenarios, and AIDC energy storage shipments from January to May already exceeded 10GWh. The problem is that these new curves share a common feature: "revenue is visible, profit margin remains to be verified," and in the short term they cannot offset the downward shift in profitability of the core business.
This is a repricing, not a mispricing
The standard for distinguishing "mispricing" from "repricing" is simple: mispricing means price has deviated from value, while repricing means value itself has changed. This time, the change occurred at three structural levels.
First, the industry's attributes have changed. Global power battery installation growth has dropped from more than 50% to around 20%, and the landscape has shifted from undersupply to oversupply. Batteries are turning from a "scarce element" into a "bulk standardized product," and the valuation center naturally shifts down from the 30 to 50 times of a growth stock to the 12 to 18 times of a cyclical growth stock.
Second, the right to distribute profits has shifted. In the era of fuel vehicles, the core components' bargaining power lay with the automakers; after electrification it once fell to the battery makers; now automakers are taking that power back through in-house development, second suppliers, and joint ventures. This is a redivision of position in the industrial chain, and once formed, it will not automatically revert.
Third, policy and geopolitical costs have become internalized. Consumption tax, the phase-down of export tax rebates, and trade barriers overlap; overseas plant investment per GWh is three times that in China (600 to 900 million yuan), with equipment depreciated over four to five years. These will lower the ROE center — the weighted ROE of 24.91% in 2025 is likely the peak of this cycle.
Therefore, the valuation falling from more than 30 times to 15 times is repricing, and reasonable; falling from 15 times to 11 times already carries an overshoot component. But "11 times" does not equal cheap. Because the denominator is still moving: if 2027 profit lands at 90 billion yuan rather than 110 billion yuan, 11 times immediately turns back into 13 times. What determines the return on this investment is not whether the valuation can go lower, but whether EPS can hold.
A rough valuation anchor. Based on 2027 net profit attributable to shareholders of 105 billion yuan (near the median of institutional forecasts): at 10 times, market value is 1.05 trillion yuan, corresponding to the current stock price, meaning "zero return"; at 12 times, market value is 1.26 trillion yuan, about 20% upside; at 15 times, market value is 1.58 trillion yuan, about 50% upside. In other words, the assumption implied by the current price is that CATL's long-term reasonable valuation multiple will not exceed 10 times — this is already the pricing of a mature manufacturing industry, or even a strongly cyclical industry. You can agree with this assumption, but you must be clear that you are betting on the combination of "manufacturing valuation plus cyclical-bottom earnings," and neither side can afford another mistake.
Conclusion
CATL's valuation has fallen to a level that "can be accepted without optimism," but to truly make money, what is needed is not a lower valuation, but more certain earnings. This is not a decline that can be lightly dismissed as "mispricing," but the first time the market has seriously priced a battery leader as a manufacturing company rather than a technology company.
Comments