Demand intact with near-term pressure on profitability

CATL reported 3Q26 results after market close on 20 October. Revenue growth was largely in line with the battery shipment trend, but gross margin fell both y-y and q-q, owing to the shift in revenue mix toward the domestic ESS segment. Net profit grew y-y but declined q-q, which the company mainly attributed to the incremental battery consumption tax, lower export VAT refund as well as higher asset impairment loss. Nomura expects global battery demand to remain resilient in the long term, backed by continued EV penetration in Europe and other emerging markets and robust global ESS demand driven by energy security and AIDC rollouts;