Key Takeaways:
CALB's new supplier deal with Xiaomi Auto for its second vehicle brand provides a critical endorsement that could help the battery maker expand its share in a competitive market, threatening the dominance of larger rivals like CATL.
CLSA said in a report that CALB can leverage Xiaomi's market recognition to secure more battery supply orders from globally renowned EV brands, enhancing the reliability of its full-year shipment target.
The announcement pushed CALB's Hong Kong-listed shares up 3.09% to HKD 30.04 on Tuesday, with turnover reaching HKD 75.3 million. The deal makes CALB a supplier for the upcoming third model from Xiaomi, an extended-range SUV. This adds another key supplier to Xiaomi's roster, which includes CATL and Fudi for its first two models.
For investors, the partnership signals a potential re-rating for CALB, which has been trading at a discount to its peers. CLSA maintained its HKD 49 price target, noting the stock's 18x estimated 2026 price-to-earnings ratio is attractive given the improved earnings visibility this deal provides.
The move highlights a broader trend among electric vehicle makers to diversify their battery supply chains. Xiaomi Auto's first two models, the SU7 and YU7, use batteries from industry leader CATL and BYD's Fudi unit. By adding CALB, and with reports of SUNWODA also being a key supplier, Xiaomi is building a multi-supplier strategy to mitigate risks and secure capacity.
This strategy increases competition among battery producers, who are vying for contracts from the world's fastest-growing EV manufacturers. For CALB, winning the Xiaomi contract is a significant validation of its technology and production capabilities against more established players.
This article is for informational purposes only and does not constitute investment advice.
