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Unleashing 40 Billion for Buyback
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Author | Wang Lei
Editor | Qin Zhangyong
Every time CATL releases its financial report, it refreshes industry perception.
In the first half of the year, revenue reached 276.917 billion yuan, nearly 100 billion more than the 178.9 billion yuan of the same period last year. Net profit was 43.284 billion yuan, a year-on-year increase of 41.98%.
That means daily earnings of 240 million yuan, nearly 10 million earned in an hour.... Last year's same period, King Ning was only earning 170 million a day. A year later, King Ning's money-making ability is still running wild.
In stark contrast, multiple new energy vehicle manufacturers have successively released semi-annual performance forecasts, many facing profitability pressure, which actually has clear economic logic behind it:
From January to May 2026, the automotive industry's profit margin in China was only 3.4%. The vehicle manufacturing segment's profit margin was down to just 1.5%. Power batteries account for 30% to 40% of total vehicle costs, an absolute "major cost factor".
Industry chain profits are visibly concentrating on the battery segment, which is indeed an important source of CATL's profitability. However, if you turn to the details in CATL's financial report, even a strong King Ning cannot remain unaffected in the face of rising raw material prices upstream.
01
Absolute "King Ning"
In the first half of this year, CATL posted the highest first-half revenue in its company history: 276.917 billion yuan. Correspondingly, the second quarter also contributed a quarterly record high of 147.786 billion yuan.
This growth rate is already quite outrageous for CATL's super huge scale.
Net profit attributable to the parent company reached 43.28 billion yuan, a year-on-year increase of 41.98%; Net profit attributable to parent after deducting non-recurring gains and losses was 39.01 billion yuan, a year-on-year increase of 43.44%. Daily net earnings were about 240 million yuan in the first half. In the time it takes for others to bend down and pick up money, King Ning has already earned 3,000 yuan.
How is this money earned? CATL has a clear business ledger.
Among them, power batteries remain CATL's core base. In the first half of the year, revenue reached 192.12 billion yuan, a year-on-year increase of 46.02%, accounting for approximately 69.38% of total revenue.
Matching revenue, CATL's total battery system capacity is 525GWh. Production reached 498GWh in the first half of the year, with capacity utilization rate climbing to 94.86%. This means the company's production lines were almost fully open in the first half of this year, with absolutely no shortage of orders. Moreover, the 498GWh capacity corresponds to revenue of 276.917 billion yuan, with an output value of about 560 million yuan per GWh, higher than the industry average.
More importantly, market share is back.
According to global power battery installation statistics by well-known institution SNE Research, CATL's global market share from January to May this year was 40.2%, a year-on-year increase of 2.2 percentage points. Sitting in the first place globally for the eighth consecutive year, market share in overseas markets outside China also increased by 3.7 percentage points to 33.7%.
Looking at the domestic market, statistics from the China Automotive Power Battery Industry Innovation Alliance show that CATL's share in passenger vehicle installation volume in the first half of this year was 46.7%, an increase of 5.6 percentage points year-on-year, a rebound for the first time in nearly three years. Especially for ternary lithium batteries, the share reached 75.2%. That is, for every 4 ternary batteries sold, 3 are from CATL.
Except for power batteries, CATL's energy storage battery revenue began to catch up in the first half of the year, reaching 53.26 billion yuan, surging 87.5% year-on-year, accounting for 19.2% of total revenue, already close to its full-year revenue last year. It has become the fastest-growing segment for CATL in the first half of the year, also becoming the second growth curve pulling CATL's revenue growth.
This also aligns with industry conditions. According to SMM data cited in CATL's semi-annual report, global energy storage cell shipment volume was about 486GWh in the first half of the year, a 93% year-on-year increase, with AI data centers becoming new demand.
In CATL's three major main businesses, the most eye-catching one in the first half of this year was actually the "recycling business" which is most easily overlooked by outsiders. Although the scale was not large at only 18.81 billion yuan, it grew by 67.2% year-on-year, and the gross margin reached the highest of the three businesses at 27.0%, an increase of 5.8 percentage points year-on-year.
With good performance on core indicators, CATL's other financial data is basically all profitable.
Net operating cash flow in the first half of the year was 60.217 billion yuan, higher than net profit attributable to parent of 43.284 billion yuan. This point is very important, indicating that company profits are not "paper profits". Company inventory was 130.819 billion yuan, with the beginning balance being 94.526 billion yuan, a half-year increase of about 38.39%. Combined with capacity utilization rate, it also explains that CATL currently has ample cash reserves.
02
King Ning Also Has A Temper
Aside from having ample reserves, the financial foundation is also thick. While releasing the semi-annual report, CATL also launched a buyback plan.
It announced the largest single share buyback plan in A-share history, planning to spend 20 billion to 40 billion yuan to buy back A-shares and cancel them all. The upper limit of the buyback price is 573 yuan/share, a premium of nearly 50% over the closing price of the day.
This amount upper limit also set the record for the largest single buyback plan in A-share history, with the previous record held by Gree Electric Appliances' 15 billion yuan in 2021. The 40 billion yuan upper limit is nearly equal to CATL's entire net profit in the first half of the year.
And unlike previous corporate stock buyback operations, a cancelled buyback means reducing registered capital. The bought-back shares will no longer circulate. Total share capital actually becomes less, directly enhancing EPS and net asset value per share for remaining shareholders. Calculating with the upper limit 40 billion and 573 yuan, the maximum buyback is about 69.808 million shares, accounting for 1.5% of total share capital. EPS enhancement is about 1.5%.
From an accounting perspective, CATL indeed can afford this money. Monetary funds on hand were 372.05 billion yuan. Even with the upper limit of 40 billion fully bought back, it only accounts for 10.8% of monetary funds. Calculated based on total assets of 1.13888 trillion yuan, 40 billion only accounts for 3.5%.
At the performance briefing, the reason for discussing buyback was very straightforward — its value was undervalued.
On the day the financial report was released, CATL A-share closing price was 383.01 yuan, while the 52-week high was 468.75 yuan. Performance hit a new high, yet stock price fell nearly 20% over half a year.
Under these premises, the 40 billion yuan buyback of real money is CATL's attitude to the market. That is I earn enough, have enough money, and have full confidence in the future. But the market's pricing for CATL is clearly too low.
03
Upstream Pressure Transmission
Despite the revenue running wild, CATL's profitability level has declined somewhat. Compared to the profit growth far exceeding revenue growth of the same period last year, this year King Ning's profit can no longer catch up to revenue growth. Revenue year-on-year increase in the first half was 54.8%, net profit attributable to parent grew 41.98%, nearly 13 percentage points slower than revenue.
The core reason is that overall gross margin dropped from 25.02% in the same period last year to 23.93%, down about 1.1 percentage points.
Broken down by business, power batteries as the core main force had the most severe gross margin decline, dropping 1.78 percentage points to 20.63%. Energy storage gross margin dropped 1.56 percentage points to 23.96%. Only the recycling business with the smallest scale saw an increase.
Management attributed the gross margin decline at the performance meeting to a "math problem". Gross margin = Gross Profit / Total Revenue. Unit gross profit remained unchanged, denominator revenue increased, gross margin got diluted.
The reason for gross profit decline is not hard to guess. Public data shows that since the beginning of this year, prices for both lithium iron phosphate and ternary materials have risen.
In January, lithium iron phosphate price was 50,000 yuan/ton, but by May, at the peak price, it exceeded 60,000 yuan, rising over 20%. And compared to the same period last year, the increase is even larger.
But raw material price hikes cannot be immediately transferred to customers because auto orders are generally long-term supply prices and cannot be adjusted in time. So this part of the cost pressure can only be borne by CATL temporarily.
Therefore, at the performance meeting, it emphasized suggesting investors pay more attention to unit net profit rather than gross margin, i.e., deduct taxes and three major expenses from gross profit. The remaining core operating profit is closer to the actual profitability of the main business.
By this standard, core operating profit in the first half of the year was 45.377 billion yuan, a year-on-year increase of 70.1%. Core operating profit margin rose from 14.91% to 16.39%. From this perspective, the state of the main business is better than what the balance sheet gross margin appears to be.
In addition, there is another detail easily overlooked but sufficient to affect overall profit. CATL's financial expenses in the first half of this year were -631 million yuan, while the same period last year was -5.822 billion yuan.
The main reason is foreign currency monetary items held incurred exchange losses due to exchange rate fluctuations. That is, simply due to exchange rate volatility, CATL earned 5.2 billion yuan less, and this part is a real profit increment.
In addition, car companies fleeing CATL is also starting to turn from rumors into reality. In the semi-annual report submitted by CATL, the 46.7% domestic passenger vehicle installation share, although still industry number one.
But looking at a longer time line, CATL's share in the domestic passenger vehicle market has long since dropped from a peak of over 50% in 2021, fluctuating back and forth in the range of 43% to 48% in recent years. And looking at newly launched cars recently, CATL is indeed slowly degenerating from "the only option" in car company purchase lists to "one of multiple options".
So under this trend, overseas has become the next key direction for King Ning. And the overseas performance shown in the semi-annual report corroborates that King Ning's judgment is correct.
In the first half of this year, overseas revenue reached 87.129 billion yuan, accounting for 31.46%, a year-on-year increase of 42.35%. What was eye-catching was the gross margin, as high as 29.97%, nearly 9 percentage points higher than the 21.16% in China. Factories in Hungary, the US, and Indonesia went into production successively. The customer list includes Volkswagen, BMW, Toyota, these global mainstream car companies.
From the perspective of "profit-making efficiency", overseas is clearly better. This is also why CATL is willing to spend tens of billions of euros to build factories in Europe and Southeast Asia.
However, overseas is both opportunity and variable. While business and profit space are large, tariffs, exchange rates, and geopolitical risks are more. But it is also the starting point of CATL's next round of scale expansion.
