Goldman Sachs | CATL: Beyond Cells, Towards Energy Solutions | Buy

We initiate coverage on CATL, the world's largest power battery manufacturer, with a Buy rating on both its H-shares and A-shares. Our 12-month target prices are HKD 946 and RMB 566 respectively, implying 51%/57% upside. Our differentiated view centers on its Battery Energy Storage System (BESS). The market sees incremental shipments, but we see a strategic integration layout that can boost profit margins, earnings quality, market share, and valuation. Behind this is CATL's deepening moat relative to domestic battery peers, built on years of cost and technology leadership and ecosystem development. Forward integration, combined with high-margin, replicable long-term service agreements, will enable greater project value capture. We expect CATL's domestic energy storage battery share to double to 40% by 2030. Meanwhile, power batteries remain the core profit pillar of structural expansion. We expect the company's share in China to be more resilient, trending toward 50% by 2030. Goldman Sachs, Nick Zheng