Chinese Battery Makers Benefit From U.S. Rising Demand — Market Talk

By Jiahui Huang

Shares of Chinese battery maker Contemporary Amperex Technology rose sharply in Hong Kong and Shenzhen, after CATL's deal with an energy storage-system manufacturer boosted sentiment about the battery sector.

The company's Hong Kong-listed shares closed 3.2% higher at 567.50 Hong Kong dollars, equivalent to $73.02, on Thursday. Its Shenzhen-listed shares closed 7.6% higher at a record 415.60 yuan, or $58.43.

The gains came after CATL signed a 10-year partnership with Beijing HyperStrong Technology, the leading manufacturer of energy storage systems worldwide. HyperStrong said that it will buy up to 200 gigawatt hours of battery energy storage systems from CATL between 2026 and 2028.

Beijing HyperStrong Technology closed 20% higher, hitting the Shanghai Stock Exchange's daily trading limit.

Considering it is the fourth quarter, the peak season for EV manufacturing, the pricing of the ESS contract was likely set at an advantage to CATL, Morningstar senior equity analyst Vincent Sun said.

The gains were also likely driven by news that the national standard for solid-state batteries will be released soon, which would benefit the development of the solid-state battery industry, Sun added.

"After two years of disciplined capacity growth, the battery sector is entering a new expansion phase," said HSBC Global Research analysts led by Yuqian Ding in a recent note. The rebalancing of supply and demand has slightly increased battery and supply chain pricing from trough levels, they said.

Demand is surging across the energy storage system and EV segments, they said. China's battery energy storage system sales in the domestic market reached 211 gigawatt-hours in the first nine months of this year, they added.

The deal between HyperStrong and CATL added to signs of stronger demand for battery energy storage systems in the next few years.

The battery maker maintains a leading position in its home market of China. It held a 46% share of the EV-battery industry in October, according to data from the China Automotive Battery Innovation Alliance. CATL is also a top battery supplier for major automakers, counting Tesla, Volkswagen, BMW and Geely among its clients.

Write to Jiahui Huang at jiahui.huang@wsj.com

Chinese auto-parts companies' 4Q margins are expected to stabilize after margin erosion in 3Q, as auto-component prices have bottomed out, UOB Kay Hian analysts Ken Lee and Bella Lu say in a note. The bank maintains a market weight rating on the Chinese auto sector, favoring auto-parts companies over original equipment manufacturers due to their dominant market positions. Its top buys are CATL and Geely, supported by their strong research and development. The brokerage's top sells are BYD and Li Auto amid peaking China sales and mounting pressure on product prices and margins. It cuts Li Auto's target price to HK$60.00 from HK$70.00 citing lower earnings estimates.(jason.chau@wsj.com)

Q3 2025 saw robust revenue and net profit growth, with YTD net profit up 56.34% year-over-year. Operating cash flow surged, and increased R&D investment supports future growth amid higher asset impairment losses.

Original document: Sungrow Power Supply Co., Ltd. Class A [300274] Interim report — Oct. 29 2025

China's auto sector faces short-term gains but long-term risks amid escalating U.S.-China trade tensions and the Dutch government's seizure of Chinese-owned chip maker Nexperia, UOB Kay Hian analysts say in a note. China's rare-earth curbs and retaliatory export controls on Nexperia may help domestic carmakers gain market share, but overseas plants could face disruptions. These may be eased by producing parts with rare earth in China for assembly abroad, though tariffs could lift costs and curb exports, flattening 2026 growth. Auto-parts makers' 4Q net profits could fall 2%-11% on revenue declining 10% amid weaker overseas demand. UOB keeps the sector's market-weight rating, favoring CATL and Geely for innovation; BYD and Li Auto are top sells amid peaking sales and margin pressure. (jason.chau@wsj.com)

CATL is set for strong revenue and earnings growth in coming years, though its shares are looking overvalued, Morningstar analyst Vincent Sun says. He cuts his 2025 revenue forecast by 7% on soft battery prices but raises 2026-2029 forecasts by 2% annually, projecting a 12% CAGR from 2024-2029, driven by rising lithium-ion battery sales amid robust EV and energy storage demand. Net profit forecasts for 2025-2029 are lifted 3%-5%, with a 17% CAGR on higher gross margins from economies of scale and lower raw material costs. Morningstar raises its fair value estimates to CNY292 from CNY280 for A-shares, which recently traded at CNY371.78, while H-shares' fair value is raised to HK$313 from HK$300; they were recently at HK$537.50. (jason.chau@wsj.com)

Chinese battery maker CATL will likely see continued strong earnings in the next few years, thanks to higher revenue and increasing economies of scale, HSBC Global Research analysts write in a note. The company's stock prices have risen sharply in the past three months, due to robust battery demand and strengthened market conviction on mid-term growth, they say. That follows the company's strong 3Q results, with net profit of CNY18.5 billion, largely in line with expectations, HSBC says. The company's shipments will likely remain strong in 4Q, boosted by global demand and ongoing overseas EV battery share gains, they say. HSBC Global Research maintains a buy rating on the stock and raises its target price for its H-shares to HK$594.00 from HK$479.00 and its A-shares to CNY450 from CNY363. (jiahui.huang@wsj.com; @ivy_jiahuihuang)