CATL Builds Out Swap Infrastructure While DBS Trims Earnings Outlook
Published on 10/26/2026 at 17:21 | Editorial boerse-global.de
CATL is pressing ahead on the infrastructure front even as one of its sell-side backers takes a knife to its profit forecasts. DBS cut its price target on the Chinese battery giant's A-shares to 438 Yuan from 484 Yuan, keeping a buy rating intact — a split verdict that captures the tension running through the CATL story: volumes are climbing, but the money left over on each unit is shrinking.
The downgrade follows quarterly results published roughly a week ago that missed expectations. DBS points to a richer mix of lower-priced products and heavier tax charges as the culprits, with profit growth coming in as weak as it has been in nearly two years, according to Reuters, which also flagged competition and slowing Chinese car sales as drags.
Per-Unit Economics Under the Microscope
The number that matters most for the valuation is profit per watt-hour, which DBS pegged at 0.082 Yuan in the third quarter of 2026 — a 16% slide from the prior quarter and below market expectations. That metric explains why the bank's buy case rests on long-term business expansion rather than near-term margin stability. Higher shipments alone, in other words, do not guarantee proportionate earnings growth.
DBS now models 2027 earnings per share of 21.9 Yuan, down from 24.2 Yuan, a revision that signals the bank sees the pressure as structural rather than confined to a single quarter.
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Tax policy is a big part of that calculation. DBS expects China's value-added tax rebate on battery exports to fall from 6% to zero in 2027, removing another slice of fiscal support. The bank also lays out the mechanism by which the burden lands squarely on manufacturers: producers largely absorb the consumption tax through their tax-inclusive pricing, meaning the levy cannot simply be passed on to customers in full. The consumption tax on batteries has stood at 2% since September and is slated to rise to 4% in September 2027.
Shipments as the Counterweight
Against that backdrop, CATL is targeting delivery growth of 20% to 30% in 2027, with steady expansion expected through 2030. DBS treats that as a possible offset rather than a full hedge — if overseas demand for EV and storage batteries comes in stronger than expected, extra volumes could partially cushion the decline in per-unit profit.
On the operational side, CATL signed a strategic cooperation agreement on Wednesday with Shaanxi Transportation Holding Group covering the electrification of commercial vehicles, battery-swap infrastructure for heavy trucks, and energy storage and related services. A separate pact on 19 October brought together CATL, Shidai Dianfu and Huawei-affiliated Yinwang; media reports suggest the tie-up will link Huawei's intelligent driving systems with CATL's battery-swap ecosystem.
The company unveiled its Tianxing II battery platform and an improved swap solution for heavy trucks about a week ago. Its Chinese network is set to reach 900 swap stations for heavy trucks by year-end, with 2,000 targeted by 2027 and 10,000 planned over the longer term, Reuters reported. On stationary storage, CATL published its "Storage+" report jointly with the International Renewable Energy Agency, IRENA, on 16 October, with both pushing a global energy-storage initiative aimed at deepening international cooperation in the sector.
Buybacks Already on the Books
The quarterly report released on 20 October also documented buybacks already completed. By the end of September, CATL had repurchased a cumulative 10,945,162 A-shares, equal to 0.2482% of total A-share capital, for 3.303 billion RMB excluding fees.
For investors, the question now is how far rising deliveries can outrun the squeeze on unit returns. DBS's lower targets paired with an unchanged buy call sum up that trade-off neatly: growth remains the opportunity, while weaker profitability caps how much valuation room the stock can command.
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