JP Morgan interprets CATL: Large energy storage orders, H-share unlock, and inclusion in the Hang Seng Tech Index

As CATL's stock price fluctuates due to a massive energy storage order, JP Morgan has analyzed a series of market dynamics related to CATL in its report. According to the Wind Trading Desk, JP Morgan's latest research report focuses on three key events impacting investors: First, CATL has received a 200GWh energy storage battery order from Haisong Chuang, but analysts remind investors to interpret the actual binding force of this order with caution. Second, starting from November 20, nearly 50% of the H-share IPO locked shares will be unlocked, with approximately 77.5 million shares facing potential selling pressure; Third, the company is expected to be included in the Hang Seng Tech Index, which may trigger passive fund inflows. JP Morgan maintains a "Neutral" rating on H-shares, lowering the target price from HKD 600 to HKD 575 (only a 6% upside from the latest closing price), while maintaining an "Overweight" rating on A-shares, with a target price of RMB 480 (approximately a 19% upside). It is noteworthy that CATL's H-share is currently trading at a 23% premium over A-shares, which is extremely rare among dual-listed stocks, and H-shares are heavily shorted, with a borrowing utilization rate as high as 95%. These factors, combined with the expectations of unlocking and index inclusion, will bring significant uncertainty to the stock price trend. Large Energy Storage Order: More Symbolic than Substantial? A 200GWh energy storage order from Haisong Chuang has ignited CATL's stock price, and market expectations for the company's shipment volume in 2026 have rapidly increased. However, JP Morgan remains cautious and reminds investors not to make judgments solely based on the surface value of the agreement. The report points out that such strategic agreements historically often lack strict binding force, and the actual execution volume will depend on future market demand. Similar agreements were very common during the supply tightness period of 2021-2022, mainly reflecting signals from industry participants that supply was expected to be constrained while demand was strong, potentially providing priority to contracting parties during shortages. However, based on past experiences in the electric vehicle industry, if market demand falls short of expectations, "volume commitments" may not be fulfilled. A noteworthy detail is that Haisong Chuang explicitly states in the agreement: The actual procurement volume will be adjusted annually based on rolling assessments at the end of each year. Therefore, JP Morgan indicates that it will not raise CATL's sales forecast based solely on this order unless there are clear signs that the company is responding to strong demand by expanding production. Historically, CATL's share in Haisong Chuang was about 80% before 2024, which is expected to drop to around 30% in 2024 due to the entry of Yiwei Lithium Energy. Industry experts predict that CATL's share in Haisong Chuang will rebound to about 60% in 2025. JP Morgan notes that the bullish camp in the market has raised expectations for CATL's 2026 production target from 1.0-1.1TWh to 1.3TWh or even 1.6TWh. Analysts believe these expectations are overly optimistic. According to JP Morgan's estimates, the company's production capacity by the end of 2026 will be approximately 1.3TWh, corresponding to an annual effective capacity of over 1.1TWh. This represents a significant gap from the market's aggressive expectations, and investors need to maintain a rational judgment regarding the speed of capacity expansion. H-share Technical Aspects: Unlocking Pressure and Short Squeeze In addition to questioning the authenticity of orders, the technical pressure cannot be ignored. The report emphasizes that nearly half of the cornerstone investor shares for H-share IPOs (approximately 77.5 million shares) will be unlocked on November 20th, considering that the current stock price has risen 107% compared to the IPO price and there is a significant premium relative to A-shares, the unlocking will constitute potential selling pressure. However, the extremely high short positions also lay the groundwork for a potential "short squeeze" market. The report shows that the short-selling ratio of CATL's H-shares is very high, with the utilization rate of the stock lending pool reaching 95%. Against this backdrop, the market's expectation that CATL's H-shares may be included in the Hang Seng Tech Index (HSTECH) becomes crucial. If successfully included, it is expected to bring in passive fund inflows equivalent to two days of average trading volume, potentially triggering intense short covering. It is worth mentioning that CATL is the only dual-listed stock where H-shares show a significant premium over A-shares, with the premium reaching as high as 45% at its peak. JP Morgan attributes this rare phenomenon to several factors: Low liquidity: The average daily trading volume of H-shares is USD 141 million, while A-shares reach USD 1.5 billion. Global investor demand: Some portfolios cannot trade A-shares or prefer H-shares. In the MSCI China Index, H-shares account for 82% of the weight, while A-shares only account for 13%. Scarcity premium: CATL is seen as a high-quality target for gaining exposure to the global electric vehicle value chain. Considering both bullish and bearish factors, JP Morgan maintains a "neutral" rating on CATL's H-shares but lowers the target price from HKD 600 to HKD 575. The core logic is that after the IPO unlocking, the unusually high premium of H-shares over A-shares is expected to narrow