J.P. Morgan: Asian views diverge in October as battery demand growth coexists with profit pressure

Why were several companies downgraded despite continued growth in battery demand?

JPMorgan still expects battery demand to grow 20%–25% in 2027, but believes taxes and trade barriers will redistribute industry profits. The bank downgraded CATL’s Hong Kong-listed shares and several second-tier battery supply-chain companies. CATL’s A-shares are now the only company in the sector to which the analysts assign an Overweight rating.
There is similar pressure in the automotive sector: the bank downgraded BYD’s A-shares to Underweight, arguing that a shift in its overseas business from exports to local production will depress profitability in 2027. As of 30 October, JPMorgan’s target price was about 20% below the share price; of the 48 analysts excluding the bank, 94% still rated the stock Overweight.

JPMorgan initiated coverage of SHEIN with an Overweight rating after its shares retreated 29% following its listing. The bank believes its on-demand fast-fashion production model is difficult to replicate and that margin pressure in 2026 is temporary. The report said active accounts were still growing by 15% and orders were also increasing.
The bank expects profits to begin recovering in the first quarter of 2027 as Middle East-related costs ease, with fiscal 2027 profit doubling to 2 billion dollars. Its target price assumes no rerating of the valuation multiple; based on the bank’s forecasts, the stock was then trading at about 9 times fiscal 2027 earnings per share, or about 3 times net of cash.

JPMorgan maintained its Overweight rating on Weichai Power, saying its earnings mix is shifting more rapidly toward power businesses serving AI data centers. The power and energy business already contributes about 25% of group profit, and shipments of diesel engines for AI data centers rose from 500 units in the first quarter to 1300 in the third quarter. Despite a downturn in the liquefied natural gas heavy-truck market, recurring profit rose 14% year on year in the third quarter.
At Formosa Plastics Group, AI materials and refining drove third-quarter profit to an eight-year high. Nan Ya Plastics’ electronic materials profit margin reached 30.9%, ahead of the third quarter of 2027 previously forecast by the bank. JPMorgan raised its group earnings forecasts for 2026 and 2027 by 31% and 33%, respectively, and maintained Overweight ratings on the group’s companies.

JPMorgan upgraded Thailand’s TISCO Financial Group from Neutral to Overweight, citing expectations of improved loan growth, a stabilizing net interest margin and room for higher dividends per share over the next three years. As of 30 October, only 22% of the 23 analysts excluding JPMorgan rated it Overweight.
The bank downgraded Thai Union directly from Overweight to Underweight and cut its 2026–2027 earnings forecasts by 17%–19%, because tuna prices and freight costs were squeezing margins. Of the 25 analysts excluding JPMorgan, 80% still rated it Overweight.

As of October 2026, JPMorgan’s 2026 revenue forecast for the Asia ex-Japan information technology sector had been cumulatively revised upward by 27.4% over the preceding 12 months, down from 31.2% in September. Its net profit forecast had been cumulatively revised upward by 17.4% over the same period, also down from 20.2% in September. These figures reflect the size of forecast revisions, not actual revenue or profit growth.
The MSCI Asia ex-Japan information technology sector fell 12.4% in October, but was still up 59.9% for the year as of 30 October. Both returns exclude dividends.