Citi Anticipates Battery Manufacturers Will Transfer Metal Costs, Recommends Purchasing CATL on Price Dips Amid Ongoing Short-Term Weakness
Lithium Price Increase: Lithium prices have surged by 46% year-to-date, leading to an estimated increase in battery manufacturing costs by RMB32 per kWh, according to Citi Research.
Impact on Battery Manufacturers: Battery companies are expected to pass most of the increased metal-related costs downstream while sharing some of the non-metal cost inflation.
CATL's Market Performance: CATL has recently underperformed due to higher costs, weak EV sales concerns, and selling pressure from capital flows, with a significant short selling ratio.
Investment Outlook: Citi Research suggests that CATL's current weakness may present a good buying opportunity for investors in the short term.
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Ford's Move to Strengthen Partnership with CATL Raises Concerns in US Congress
Ford's Partnership with CATL: Ford is expanding its collaboration with CATL to produce energy storage batteries, involving a $3.5 billion plant and significant federal tax credits.
Congressional Concerns: US Congress members, including John Moolenaar, have expressed dissatisfaction with Ford's partnership, seeking clarification on the licensing agreement and its implications for production control and royalties.
M Stanley Predicts CATL (03750.HK) Share Price Increase in the Coming 15 Days
Morgan Stanley's Prediction: Morgan Stanley forecasts that CATL's share price will rise within the next 15 days, rating the stock as Overweight with a target price of $490, based on a 70-80% probability of this outcome.
Valuation Insights: The recent correction in CATL's share price has made its short-term valuation more appealing, as the market is overly concerned about cost inflation impacting profit margins.
Cost Management: CATL has a history of successfully passing on costs to consumers, as seen during the previous lithium price upcycle, and is expected to resume production at its lithium mines soon.
Inventory Status: The company maintains a sufficient amount of low-cost inventory, which is expected to support its operations into the first quarter of 2026.
