Highlights

• 2Q26 net profit of Rmb22.5b (+36.5% yoy/+8.7% qoq) was in line, taking 1H26 net profit to Rmb43.3b (+42.0% yoy). However, gross profit per GWh
  fell to Rmb147m and net profit per GWh dropped to Rmb97m. 
   
• We raise 2026-28 sales volume by 10%/7%/0% to 1,000/1,230/1,450GWh respectively on ESS/AIDC demand, but cut gross margin to 23.4%/23.7%/23.9%; we expect margins to stabilise from 2H26.
   
• We cut net profit by 1%/7%/12% to Rmb93.6b/Rmb116.4b/Rmb139.1b respectively. Maintain BUY; we cut target price to Rmb585.00/HK$675.00
  (23x 2027F PE).

Analysis

• 2Q26 earnings in line; 1H26 net profit up 42% yoy. Contemporary Amperex Technology Co’s (CATL) 2Q26 net profit was Rmb22.55b (+36.5%
  yoy/+8.7% qoq) and recurring net profit came in at Rmb20.92b (+36.1% yoy). 1H26 net profit reached Rmb43.28b (+42.0% yoy) and recurring net profit was
  Rmb39.01b (+43.4% yoy), accounting for about 46% of our full-year forecast, ahead of the 42% during 1H25. 1H26 operating cash flow was Rmb60.2b
  (+2.6% yoy), effective tax rate was 15.7% and annualised ROE stood at a healthy 24.2%. By segment, 1H26 power-battery revenue rose 46% yoy to
  Rmb192.1b at a 20.6% gross margin, while energy-storage revenue jumped 88% yoy to Rmb53.3b at a 24.0% gross margin. Minority interests took 8.7% of net profit and 1H26 capex was Rmb25.1b; the board also declared an interim dividend of Rmb6.5b, proposed an Rmb20b- 40b A-share buyback for cancellation and completed a US$5b H-share
  placement in May, keeping the balance sheet in a comfortable net-cash position.