Citigroup: Lower CALB (03931) target price to 19.9 Hong Kong dollars, rating "buy"

Citi released a research report stating that it has lowered the target price of CALB (03931) from HK$21.6 to HK$19.9, equivalent to a forecasted 15 times P/E ratio for 2026, which is the average level for global battery manufacturers. The rating has been updated from "buy/high risk" to "buy". Considering CALB has enough trading history and battery prices have stabilized after a sharp decline in 2023-2024, unit net profit is stabilizing, so the bank has removed the high-risk rating. After the release of the 2024 financial year performance, the bank updated the CALB model and lowered the profit forecast for 2025 and 2026 by 30% and 23%, to RMB 1.34 billion and RMB 2.162 billion respectively, mainly reflecting management guidance and lower assumptions for ESS battery unit gross margin for 2025-2026. The bank also introduced a profit forecast for 2027, at RMB 3.025 billion. Citi values CALB using the 2026 forecasted P/E ratio to better reflect its stronger net profit growth in 2025 compared to peers.