The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that following the industry downgrade report on October 20, the bank once again lowered the profit forecast for China's battery stocks covered, mainly due to lower unit profit assumptions rather than weakening shipments, and lowered the target price of Ningde Era (03750) H shares from HK$440 to HK$420.
Recent communication with automakers and energy storage system integrators shows that the transfer of taxes is more difficult than the bank's previous assumptions. Customers are unwilling to simply absorb battery-related tax burdens through price increases, but instead seek sharing, supplier cost reduction, and supply chain optimization. So far, there are no guidelines from automakers to raise vehicle prices to offset battery consumption tax.
The bank pointed out that industry differentiation intensified: in the Ningde era, unit profits were higher, net cash balance sheets and stronger cash creativity provided greater buffers, while second-tier manufacturers had thinner profit margins, weaker free cash flow, and higher leverage than the 2023-2024 downward cycle.
The bank predicts that Ningde Era's 2026/2027 net profit will be 84.8 billion yuan and 89.1 billion yuan respectively, meaning only a 5% year-on-year increase in 2027, but it is the only battery factory in the coverage area that expects positive profit growth next year. Compared with Everweft Lithium (300014.SZ) and China Airlines (03931), which are expected to reverse profits by 90%, and Guoxuan Hi-Tech (002074.SZ) is expected to turn losses; despite the stronger growth rate of second-tier shipments, the bank predicts a 25% increase in shipments in Ningde Era in 2027, and the second-tier factory is expected to increase by about 30%.
The bank maintained Ningde Era (300750.SZ) A-shares as the only “additional” shares. Ningde Times H shares and China Airlines were “neutral”, and Everweft Lithium Energy and Guoxuan Hi-Tech “reduced” holdings. The bank lowered the target price of China Innovation Airlines from HK$17 to HK$15, the target price of Ningde Era A-shares from RMB 310 to RMB 300, and maintained the target prices of Guoxuan Hi-Tech and Everweft Lithium Energy at RMB 18 and RMB 33 respectively.