CATL Earnings: Profit In Line With Guidance, Gross Margin Beat Despite Price Competition

Contemporary Amperex Technology Co. Limited, or CATL, reported a 1% net profit fall year over year in the fourth quarter, at the midpoint of the preliminary announcement. Thanks to lower lithium prices, the gross margin recovery trend remains intact, with a 3.1-percentage-point gain in the quarter from a year ago. On a full-year basis, revenue and net profit for fiscal 2023 were 1% and 5% above our forecast, respectively. We fine-tune our financial forecasts and maintain our fair value estimate of CNY 240 per share, which implies a forward price/earnings ratio of 20 times. At the current level, we view shares as undervalued, trading in 4-star territory.