Understanding the Market | CATL falls over 6% again as cornerstone lock-up period expires on the 19th of next month, both Morgan Stanley and JP Morgan downgrade the company's H-share rating

CATL fell more than 6% again, as of the time of writing, down 5.81% to HKD 551, with a transaction volume of HKD 622 million. On the news front, JP Morgan previously downgraded CATL's Hong Kong stock rating from "Overweight" to "Neutral," stating that the current valuation is relatively reasonable; at the same time, it raised the target price by 13% to HKD 600. Analysts wrote in the report that the lock-up period for cornerstone investors holding nearly 50% of the issued Hong Kong stocks will expire on November 19, which may bring certain selling pressure and create technical price pressure above. The new target price is based on a 30 times price-to-earnings ratio for the 2026 earnings forecast. Morgan Stanley stated that it raised the target price for CATL's A shares from RMB 425 to RMB 490, reiterating the "Overweight" rating; the target price for H shares was raised from HKD 465 to HKD 585, with the rating downgraded from "Overweight" to "In Line with the Market," and the preferred target shifted from H shares to A shares. The firm expects that the domestic energy storage industry will shift from low quality to high quality development over the next five years, anticipating that CATL's market share in the domestic energy storage industry will increase from the current approximately 10% to over 50% within the next three years