Goldman Sachs Names CATL, Zenergy Top China Battery Picks

Goldman Sachs has highlighted CATL and Jiangsu Zenergy Battery Technologies Group as its leading investment opportunities in China’s battery sector, citing strong electric vehicle demand, energy storage growth and improving competitive positions.

Contemporary Amperex Technology Co. (CATL), the world’s largest battery manufacturer, ranks as Goldman Sachs’ top pick. The investment bank said CATL’s massive scale, technological leadership and cost advantages provide a strong foundation as global demand for EV batteries continues to expand.

CATL’s electric vehicle battery operations remain a key earnings driver, supported by resilient market share and recovering demand. Goldman Sachs also sees the company’s transition from primarily manufacturing battery cells toward providing integrated energy solutions as an important source of future growth.

Expansion into battery energy storage system integration could help CATL consolidate market share, capture more value from projects and generate recurring service revenue. The strategy may also support stronger profit margins over time.

Goldman Sachs set a 12-month price target of HK$947 for CATL’s H-shares and RMB565 for its A-shares, based on a sum-of-the-parts valuation. Potential risks include weaker-than-expected global EV and energy storage demand, higher raw material costs and increasing competition.

Jiangsu Zenergy Battery Technologies Group ranks second among Goldman Sachs’ preferred China battery stocks. Founded in 2019, Zenergy has emerged as a rapidly expanding EV battery producer despite competing against significantly larger manufacturers.

The company benefits from automotive component expertise brought by a founding team with roots at Fuyao Glass. Goldman Sachs views Zenergy as one of the smaller battery companies successfully gaining market share as China’s battery industry consolidates.

Zenergy’s growth prospects are supported by a broader EV customer base, increasing capacity utilization and an early push into energy storage systems. Goldman Sachs expects these factors to drive the fastest EBITDA growth among companies in its coverage universe.

The bank maintains a Buy rating on Zenergy with a HK$9 price target, noting its valuation remains at a substantial discount to peers. Key risks include weaker Chinese EV demand, volatile raw material prices and intensifying domestic competition.