$CATL(300750.SZ) Financial report Quick Interpretation: In terms of the performance itself, the revenue significantly missed market expectations, but the gross margin slightly increased compared to last year's Q4, actually at 23%-24% (after including sales expenses and warranty fees into the cost of sales, which is consistent with the accounting data for Q1 2025), which also exceeded the market's expectation of a 22.1% gross margin, so the gross margin performance is satisfactory.

On the other hand, the net profit margin slightly beat expectations, mainly because of the control of three expenses (which decreased by nearly 1 billion quarter-on-quarter) and the net increase in financial income (net increase of 1.1 billion). But since the financial income was mainly influenced by exchange rate factors, the quality of the net profit attributable to the parent company, which exceeded expectations, can only be considered average.

Breaking down the core reason for the significant revenue miss, the problem lies in sales volume: the market's actual sales expectation for Q1 2025 was actually between 130-140 GWh, while according to the earnings call, the actual shipment was only 120 GWh, resulting in an expected gap of about 10-20 GWh, leading to revenue being significantly lower than market expectations. The battery unit price this quarter had no major issues, remaining stable compared to the previous quarter, around 0.6 yuan/Wh.

However, when the sales volume this season fell short of expectations, inventory continued to grow by 5.8 billion yuan this quarter. It was noted that Ning Wang mentioned in the previous quarter's inventory growth that there were 60-70 GWh of shipped goods, and Dolphin Research initially thought it would be confirmed in Q1, but actual inventory continued to grow this quarter, especially under the highly uncertain U.S. tariffs on energy storage, Dolphin Research is concerned that part of the rising inventory may be due to excessive stocking of energy storage batteries.

Therefore, the fundamental issue returns to the energy storage business, where U.S. tariffs still have a relatively large impact on Ning Wang's energy storage business. In 2024, 40%-50% of energy storage shipments are expected to go to the U.S., corresponding to about 40-45 GWh, accounting for about 9% of the overall shipment volume in 2024. Due to higher gross margins for overseas energy storage, the net profit from U.S. energy storage is estimated to account for about 10-15% of Ningde's overall net profit in 2024. The impact of mandatory energy storage allocation domestically is also a negative factor for energy storage, so this year Ning Wang's energy storage business still faces high uncertainty. The management has also indicated that policy changes are relatively large, and there is currently no good response measure, so they can only proceed cautiously.

Therefore, Dolphin Research suggests that under the influence of high geopolitical uncertainty, investments in Ning Wang should be made at relatively low levels, leaving enough safety margin.