JPMorgan's Downgrade Draws a Line Under CATL's Rally
Published on 10/24/2026 at 06:42 | Editorial boerse-global.de
CATL shares jumped 7.8% in Hong Kong, snapping a run of seven consecutive losing sessions and riding a broader recovery across Chinese auto and battery names. The bounce is a relief for anyone who sat through the sell-off. It is not evidence that the business has turned a corner.
The distinction matters because two very different signals landed in the same week. On the bullish side, Huaxi Securities argued that the sector has worked through a thorough correction and that market expectations are now repairing — a view that fits the coordinated climb in automakers and battery suppliers. Against that, JPMorgan cut its rating on CATL's Hong Kong-listed stock from Overweight to Neutral on Tuesday and slashed its price target to HK$500 from HK$725, citing faster-than-expected erosion of profitability in the electric-vehicle industry.
Both can be true at once: sentiment can improve while margins come under pressure. For a durable re-rating of CATL, the second question carries more weight.
Revenue Is Racing. Profit Is Not Keeping Up.
The quarterly figures published this week make the gap concrete. CATL booked revenue of RMB 165.22 billion in the third quarter of 2026, up 58.6% year on year, according to Reuters. Demand, in other words, is not the problem.
Should investors sell immediately? Or is it worth buying CATL?
The trouble sits further down the income statement. Net profit attributable to shareholders rose 14.5% to RMB 21.25 billion — a pace that fell short of analyst expectations. Reuters pointed to intensifying competition and cooling Chinese car sales as the drag.
That is the crux of the valuation case. CATL is growing quickly, but earnings are not matching the top line. As long as that spread persists, a friendlier sector mood is an argument for better expectations, not for improved earnings quality. Strong sales growth does not automatically translate into similarly powerful profit growth, and these numbers do not support that assumption.
A Swapping Network Takes Shape
CATL is pressing ahead with its battery-swapping buildout regardless. On Tuesday it unveiled the Tianxing II platform for heavy trucks and set out targets for its Qiji swap network: 900 stations for heavy-duty trucks in China by the end of the year, rising to 2,000 by 2027.
Strategic breadth got a further boost this week through an agreement with Beijing Automotive Group. The two sides will cooperate on developing battery-swap vehicles and the supporting infrastructure, with several BAIC brands set to be connected to CATL's Chocolate swap system. The stated ambition is an ecosystem serving one million vehicles.
The BAIC deal is the more interesting piece of the story because it links battery supply, network buildout and a battery-bank model rather than a standalone supply relationship. Yet scale targets are just that — targets. They are not connected vehicles or secured revenue, and they do not answer the current profitability squeeze. Expansion plans describe the size of the build; whether it produces a convincing economic return is a separate question.
CATL at a turning point? This analysis reveals what investors need to know now.
What Would Actually Change the Call
A larger network and fresh partnerships are no substitute for proof of economic success. The buildout speaks to operational initiative; it does not deliver an all-clear on earnings. Investors would do well to keep the construction of an offering strictly separate from its profitability.
None of this is to dismiss the sector recovery — it deserves attention. But it does not warrant a vote of confidence in CATL's profit trajectory. The company has growth and concrete expansion goals to show. A convincing earnings performance that keeps pace with the business expansion would be a far stronger signal than one good trading day.
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