As CATL's stock price fluctuates due to a massive energy storage order, JPMorgan has analyzed a series of market dynamics surrounding the company in its latest report. The investment bank highlighted three key events that could impact investors:
First, CATL secured a 200GWh energy storage battery order from HyperStrong, though analysts cautioned investors to carefully assess the actual enforceability of this agreement. Second, nearly 50% of H-share IPO lockup shares—approximately 77.5 million shares—will be released starting November 20, potentially creating selling pressure. Third, the company may be included in the Hang Seng Tech Index (HSTECH), which could trigger passive fund inflows.
JPMorgan maintained a "Neutral" rating on CATL's H-shares, lowering its target price from HK$600 to HK$575 (implying only 6% upside from the latest closing price). For A-shares, it kept an "Overweight" rating with a target price of RMB480 (19% upside potential). Notably, CATL's H-shares currently trade at a 23% premium to A-shares—an unusual scenario for dual-listed stocks—while short interest remains high, with securities lending utilization reaching 95%. These factors, combined with the lockup expiry and index inclusion expectations, could introduce significant volatility.
**Energy Storage Order: More Symbolic Than Substantial?** The 200GWh order from HyperStrong fueled optimism about CATL's 2026 shipment outlook. However, JPMorgan urged caution, noting that such strategic agreements historically lack strict enforceability, with actual procurement volumes dependent on future demand. Similar deals were common during the 2021–2022 supply crunch, primarily signaling expectations of tight supply and strong demand. Yet, as seen in the EV sector, "volume commitments" may fall short if demand disappoints.
A critical detail: HyperStrong stated that annual procurement volumes would be adjusted based on rolling assessments. Thus, JPMorgan refrained from revising CATL's sales forecasts upward unless clear signs of capacity expansion emerge. Historically, CATL held ~80% of HyperStrong's orders before 2024, but its share dropped to ~30% after Eve Energy entered the supply chain. Industry experts project a rebound to ~60% in 2025.
JPMorgan noted that bullish investors have raised CATL's 2026 production estimates from 1.0–1.1TWh to 1.3–1.6TWh, which analysts deem overly optimistic. The bank estimates CATL's 2026 capacity at ~1.3TWh, translating to effective annual output exceeding 1.1TWh—a notable gap from market expectations.
**H-Share Technicals: Lockup Pressure vs. Short Squeeze Risks** Beyond order concerns, technical pressures loom. The report emphasized that ~77.5 million H-shares held by cornerstone investors will be unlocked on November 20. Given the 107% surge since IPO and the steep A/H premium, this could trigger selling.
However, extreme short positions (95% utilization of lending pools) set the stage for a potential short squeeze. Expectations of CATL's inclusion in HSTECH—which may bring passive inflows equivalent to two days’ average trading volume—could exacerbate volatility.
CATL is the only dual-listed stock where H-shares trade at a significant premium to A-shares (peaking at 45%). JPMorgan attributed this anomaly to: - **Low liquidity**: H-share daily turnover averages $141M vs. A-shares’ $1.5B. - **Global investor demand**: Some portfolios cannot access A-shares or prefer H-shares. In MSCI China, H-shares weigh 82% vs. A-shares’ 13%. - **Scarcity premium**: CATL is seen as a prime proxy for global EV exposure.
Balancing these factors, JPMorgan expects the H-share premium to narrow post-lockup, justifying its "Neutral" stance.
