Goldman Sachs Names Top China Battery Stocks

Investing.com -- Goldman Sachs has identified leading investment opportunities in China's battery sector, highlighting the world's largest battery manufacturer and a fast-growing smaller competitor as top picks in the industry.

The investment bank's analysis focuses on companies positioned to benefit from expanding electric vehicle demand and growing battery energy storage system markets. Goldman Sachs evaluated manufacturers based on scale, technology leadership, cost competitiveness, and growth potential.

1. Contemporary Amperex Technology Co (CATL) (SZ:300750) -- CATL ranks as the top pick, holding its position as the world's largest battery manufacturer.

The company's dominance is supported by leading scale, battery technology, and cost competitiveness. Goldman Sachs notes that CATL's EV battery business provides a solid earnings foundation, backed by expanding demand and a resilient market-share trajectory following recent share recovery.

The investment bank emphasizes CATL's strategic transition from cells to integrated energy solutions as a key value driver. This shift toward battery energy storage systems integration should enable share consolidation, higher project value capture, recurring service revenue, and stronger margins.

Goldman Sachs sets a 12-month price target of HK$947 for H-shares and RMB565 for A-shares, using a sum-of-the-parts valuation framework.

Key risks include slower-than-expected global EV and energy storage demand growth, rising raw material costs, and intensifying competition.

2. Jiangsu Zenergy Battery Technologies Group (HK:3677) -- Zenergy earns the second position as an underappreciated high-growth EV battery platform with improving competitive positioning.

Despite being founded only in 2019, the company benefits from auto-component expertise inherited from Fuyao Glass, where its founding team originated. Goldman Sachs highlights Zenergy as one of the few smaller players gaining market share in China's consolidating battery market.

The company should benefit from continued EV customer diversification, rising utilization, and early expansion into energy storage systems, supporting what Goldman Sachs describes as the fastest EBITDA growth in its coverage universe.

The investment bank maintains a Buy rating on the stock with a price target of HK$9, noting it trades at a significant discount to peers.

Risks include slower China EV demand, raw material cost volatility, and intensifying domestic competition.

Original Article

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