Citi: After touring China's battery supply chain, expects lackluster capacity planning in the coming months; gives CALB (03931) a "Buy" rating with a target price of HK$33.1

Citi issued a research report stating that, according to ZE Consulting data, actual October battery capacity planning was about 3% lower than the mid-October channel survey; the November capacity survey shows that the capacity planning of the five major battery plants is expected to decrease by another 2% month-on-month to 187.5 GWh. The bank estimates that the lackluster trend will continue in the coming months, due to factors including the export tax rebate rate being cut from 6% to 0% in 2027, the front-loading export window expected to gradually narrow toward the end of the year, and the approaching Lunar New Year low season. Citi pointed out that with recent new battery capacity gradually coming on stream, average battery selling prices and profit margins will face dual pressure in the short term. In addition, CALB (03931) is expanding market share at LI AUTO-W (02015) and XIAOMI-W (01810), partially offsetting the impact of weak EV battery demand. The bank gave CALB a "Buy" rating with a target price of HK$33.1. The valuation is based on 18x 2026 forecast price-to-earnings ratio, in line with the current average level of global battery manufacturers.