Goldman Sachs: Gives CALB (03931) a "neutral" rating, competition in prices of new energy vehicle batteries is expected to ease.

Goldman Sachs released a research report stating that it is giving a "neutral" rating to CALB (03931) based on the upward adjustment of performance expectations for the 2024 fiscal year. On March 27th, CALB announced its 2024 fiscal year performance and held an investor day event at its production base in Chengdu. The bank believes this is a positive signal for the overall Chinese battery industry, consistent with their view of cyclical recovery, due to tightening supply, easing price competition, and increasing market-driven demand for Battery Energy Storage Systems (BESS). However, the uncertainty surrounding BESS demand in the near term is a key concern. Key points of CALB's investor day: 1. Stabilization of the new energy vehicle battery market According to company management, with product iteration, clearer supply patterns, and increased focus on after-sales service, price competition for new energy vehicle batteries is expected to ease. Therefore, the company believes that the price pressure from downstream Original Equipment Manufacturers (OEMs) will decrease. 2. Capacity constraints Furthermore, management emphasized signs of capacity constraints this year, with OEMs proposing expansion demands and confirming that actual new energy vehicle battery capacity may be lower than apparent capacity. Moreover, the high customization level of battery products and strict capacity requirements for specific new energy vehicle models make it difficult for second-tier manufacturers to effectively utilize their capacity. 3. Challenges and opportunities for battery energy storage systems While optimistic about the long-term growth potential of BESS, recent policy changes have brought price pressure and uncertainties compared to the new energy vehicle battery market. Management emphasized that 2025 will be the beginning of BESS marketization and highlighted that high-quality products (such as products with long cycle life) will be more favored by the market.