CATL 3Q26 First Take: Overall, CATL delivered a 'shocking' print. Revenue still grew 59% YoY, but attributable NP rose only 15%, well below expectations. Details follow.
a) Revenue remained strong. It still missed the Street.
In Q3 2026, revenue came in at RMB 165.2 bn (+59% YoY), below market consensus of RMB 175.0 bn. The shortfall vs. expectations was notable.
Growth remained shipment-driven, helped by the seasonal Q3 peak and customers pulling forward purchases ahead of the 2% battery consumption tax effective Sept 1. Average battery ASPs fell QoQ as lithium carbonate prices dropped rapidly since May, dragging on revenue.
b) GPM fell QoQ. In Q3 2026, blended GPM was 20.7% vs. the Street at 21.5%.
That was down ~250bps QoQ from 23.2%, marking a third straight quarterly decline. The trend remains unfavorable.
GP was approx. RMB 34.2 bn, roughly flat vs. Q2. Revenue rose nearly 12% QoQ, yet GP did not increase.
The QoQ GPM compression was likely driven by several factors. Battery prices were cut alongside lithium-linked pricing, and pricing on newly signed energy storage orders also trended down.
Export VAT rebates were reduced in stages and booked into costs. Inventory built at high prices in Q2, including raw materials and WIP, was consumed amid falling lithium prices, further depressing margins.
c) Net profit slid, and profit per Wh kept falling. Attributable NP was RMB 21.25 bn in Q3.
With revenue up 59% YoY, NP grew only 14.5% YoY and fell 6% QoQ. It even missed the lowered Street range of RMB 22–24 bn.
Dolphin Research sees the profit drag mainly from the following. See below.
① GPM declined QoQ. This was a key headwind.
② The 2% battery consumption tax effective in Sept: taxes and surcharges jumped from RMB 0.69 bn in Q2 to RMB 2.21 bn. The one-month increase was around RMB 1.53 bn, well above Dolphin Research's RMB 0.8 bn estimate.
③ R&D expense continued higher to RMB 7.14 bn (Q2: RMB 6.10 bn). Cost pressure intensified.
④ Impairment losses rose QoQ by RMB 1.2 bn to RMB 1.7 bn, given the sharp lithium price drop. This added to the earnings burden. $CATL(03750.HK) $CATL(300750.SZ)
