$CATL(300750.SZ) earnings quick interpretation: From the performance itself, the revenue side significantly missed market expectations, but the gross margin slightly increased compared to Q4 last year's actual 23%-24% (after including sales expense warranty reserves into COGS, consistent with Q1 2025 accounting standards), also exceeding the market's 22.1% gross margin expectation, so the gross margin performance was decent.

However, the net profit margin slightly beat expectations, mainly due to control over three expenses (a sequential decrease of nearly 1 billion) and a net increase in financial income (a net increase of 1.1 billion), but the financial income was primarily driven by exchange rate factors, so the quality of the net profit exceeding expectations can only be considered average.

Breaking down the core reasons for the significant revenue miss, the issue lies in sales volume: Market expectations for Q1 2025 sales were actually between 130-140Gwh, while the actual shipments were only 120Gwh according to the earnings report, creating an expectation gap of about 10-20Gwh, leading to revenue falling far short of market expectations. Battery unit prices this quarter were not a major issue, remaining flat with the previous quarter at around 0.6 yuan/wh.

Despite the lower-than-expected sales volume this quarter, inventory still grew by 5.8 billion yuan. Recall that CATL mentioned last quarter that 60-70Gwh of shipped goods were included in inventory. Dolphin Research initially expected these to be recognized in Q1, but actual inventory continued to grow this quarter. Especially with the high uncertainty around U.S. tariffs on energy storage, Dolphin Research is concerned that some of the increased inventory may be due to overstocking of energy storage batteries.

So the fundamental issue circles back to the energy storage business. U.S. tariffs have a relatively significant impact on CATL's energy storage operations, with 40%-50% of 2024 energy storage shipments going to the U.S., accounting for about 40-45Gwh or roughly 9% of total 2024 shipments. Since overseas energy storage has higher gross margins, U.S. energy storage likely contributes about 10-15% of CATL's total 2024 net profit. Domestic mandatory energy storage allocation policies are another negative factor, so CATL's energy storage business faces high uncertainty this year. Management has also indicated that policy changes are relatively volatile, and there is no clear countermeasure yet—they can only take it step by step.

Therefore, Dolphin Research recommends that, given the high geopolitical uncertainty, investors should aim to buy CATL at relatively low levels to maintain sufficient safety margins.