Goldman Sachs: China Battery Industry — Roadshow Feedback

Within a month of initiating coverage of China's battery sector and CATL, Goldman Sachs met roughly 150 investors across mainland, offshore, and Western cohorts and found sharply divergent views on battery demand. Domestic investors largely expect China ESS demand to peak this year, citing slower-than-expected 1H26 installations and policy uncertainty, while Western investors were more surprised by—but receptive to—Goldman's front-loaded ESS adoption framework. On EVs, investors broadly agree prior high growth is unlikely to recur; domestic investors add concerns that penetration is nearing a ceiling and that exports were pulled forward ahead of the VAT rebate exit. Overseas ESS demand exceeded China's in 1H26, with optimism on under-penetrated developed and emerging markets, though some worry Middle East conflict has pulled forward residential storage demand. CATL dominated stock-level discussion: the A-share prices a cautious 2026 outlook while the H-share prices stronger long-term growth, explaining the 54% H-share premium. Goldman views domestic caution as excessive, sees 4Q26 as the key validation window, expects CATL's 2Q margin pressure to reverse in 2H, and reiterates Buy on CATL-A and CATL-H with 12-month targets of RMB565 and HK$947. Targets rest on sum-of-the-parts valuations, with the H-share framed globally at 20x power-battery EV/EBITDA and a 25x 2030E BESS exit multiple.