CATL 2025 Annual Report "Letter to Shareholders": Industry Leadership, Opening a New Chapter of Shared Bright Future with Shareholders

When opening CATL’s 2025 annual report, the “Letter to Shareholders” signed by Chairman Zeng Yuqun on the front page stands out. In the A-share market, it is uncommon for listed companies to proactively write such a letter to shareholders in the name of the board of directors. This move surprised many investors and sparked deeper reflections on corporate governance and shareholder relations.

From the financial data, CATL delivered an impressive performance in 2025. The company’s operating revenue reached 423.7 billion yuan, a year-on-year increase of 17.04%; net profit attributable to shareholders was 72.2 billion yuan, up 42.28%. Cash flow was also excellent, with operating net cash flow of 133.2 billion yuan. After deducting 42.4 billion yuan in capital expenditures (CapEx), free cash flow remained at 90.9 billion yuan. At the end of the year, cash holdings (cash and trading financial assets) totaled 333.5 billion yuan, and the weighted average return on equity (ROE) reached 24.7%.

In terms of market share, CATL continued to maintain its global leadership. In 2025, the company held a 39.2% share of the global power battery market, ranking first worldwide for nine consecutive years. Its domestic market share was 43.42%, and overseas market share was 30.0%. The company’s energy storage battery shipments also ranked first globally for five consecutive years, with annual sales of 541 GWh of power batteries, a 41.85% increase from 381 GWh the previous year; sales of energy storage batteries reached 121 GWh, up 29.13% from 93 GWh.

The “Letter to Shareholders” format is a voluntary disclosure in annual reports. Warren Buffett once said that in annual reports, he pays the most attention to management’s analysis and discussion of the business, which corresponds to the third section, “Management’s Discussion and Analysis,” a mandatory disclosure. In contrast, the “Letter to Shareholders” is a proactive communication from the board to shareholders, reflecting the management’s commitment to their entrusted responsibilities.

In the A-share market, due to a relatively short development history and concentrated ownership structures, many management teams and major shareholders are often the same entities, leading some managers to believe “I am the shareholder” and neglect their fiduciary duties to minority shareholders. For example, some well-known company chairpersons have publicly criticized shareholders, claiming they are unimportant, and naturally, their annual reports do not include a “Letter to Shareholders.” This attitude reveals a lack of awareness of fiduciary responsibilities toward shareholders.

Some believe that the reason certain companies do not write a “Letter to Shareholders” is that management, often with an engineering background, focuses more on business development and considers writing such content as “superfluous.” Many of these chairpersons are technical experts who lack the awareness of communicating with shareholders. Conversely, management with a liberal arts background may be better at expressing company philosophy through words. For example, Midea Group’s Chairman Fang Hongbo, whose first job at Midea was as an in-house magazine editor, has written an excellent “Letter to Shareholders” that helps investors better understand the company’s leadership ideas.

Previously, CATL’s annual reports did not include a “Letter to Shareholders,” which disappointed some investors. However, this changed in 2025. Some analysts believe this may be related to CATL’s issuance of H-shares, as writing such a letter is common among Hong Kong-listed companies. Data shows that in mature capital markets, “Letters to Shareholders” are voluntary disclosures but have become a routine practice for most companies. In the A-share market, however, the popularity of this format still has room to grow.

CATL’s first disclosure of a “Letter to Shareholders” in its 2025 annual report undoubtedly sets a good example for the A-share market. The full letter, spanning 2,551 words, elaborates on the company’s development strategy and future outlook. The closing line states: “We will live up to your trust and support, and together move toward a brighter future—an even better ‘Your Era’.” The clever use of a pun not only demonstrates the company’s approachability but also conveys respect and commitment to shareholders.

For investors, this letter is not only an important window into management’s thinking but also a reflection of CATL’s progress in corporate governance. As the A-share market continues to develop, it is hoped that more listed companies can learn from this practice, strengthen communication with shareholders, improve governance structures, and truly respect and serve their shareholders.