Company Reports

Contemporary Amperex Technology reported 7% net profit growth year over year in the fourth quarter. Thanks to the lower lithium price, the gross margin recovery trend remains intact, with a 5 percentage point gain in the quarter from a year ago. Given the low seasonality for electric vehicle sales during the period, we consider CATL’s first-quarter net profit, accounting for 20% of our original full-year forecast, in line with our expectations. We fine-tuned our forecast and slightly raised fair value estimate to CNY 242 per share from CNY 240, which implies a forward price/earnings ratio of 20 times. At current levels, we view shares as undervalued, with stocks trading in 4-star territory.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to SNE Research, CATL is ranked first in the global EV battery market with a market share of 37% as measured by installed capacity in 2023 and 43% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Geely, SAIC, and Volkswagen.

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.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to SNE Research, CATL is ranked first in the global EV battery market with a market share of 37% as measured by installed capacity in 2023 and 43% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Geely, SAIC, and Volkswagen.

Contemporary Amperex Technology, or CATL, reported 8% revenue growth year over year and 11% growth for net profit in the third quarter. The results trailed our expectation as revenue and net profit for the first three quarters only accounted for 67% and 70% of our previous full-year forecasts, respectively. However, the margin recovery trend since the trough level last year continued, with a 0.5-percentage-point gain in the quarter’s gross margin from last quarter. We cut our financial forecasts and reduce our fair value estimate to CNY 240 per share from CNY 257, which implies a 2024 price/earnings ratio of 20 times. At the current level, we view shares as undervalued.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to SNE Research, CATL is ranked first in the global EV battery market with a market share of 37% as measured by installed capacity in 2022 and 48% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Xpeng, Geely, SAIC, and Volkswagen.

Second-quarter revenue for no-moat Contemporary Amperex Technology, or CATL, grew 56% year over year and net profit for the quarter increased 63% year over year. Gross margin gained 0.7 percentage points in the quarter from last quarter, indicating the margin recovery trend since the trough level last year remains on track. With the first-half revenue and net profit accounting for 46% and 51% of our previous full-year forecast, respectively, we consider the results are slightly ahead of our expectation. As a result, we increase our financial forecast and raise fair value estimate to CNY 257 from CNY 240.56 per share, which implies a forward price/earnings ratio of 25 times.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to SNE Research, CATL is ranked first in the global EV battery market with a market share of 37% as measured by installed capacity in 2022 and 48% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Xpeng, Geely, SAIC, and Volkswagen.

No-moat Contemporary Amperex Technology reported 83% revenue growth year over year in the first quarter. The margin recovery since the trough in the first quarter of last year remains on track, with a 6.8-percentage-point increase in the first-quarter gross margin from a year ago. With first-quarter revenue and net profit accounting for 21% and 24% of our full-year forecast, respectively, we consider the results in line with our expectation. As a result, we keep our financial forecast unchanged and keep our fair value estimate at CNY 433 per share, which implies a forward price/earnings ratio of 26 times.

Fourth-quarter revenue for no-moat Contemporary Amperex Technology, or CATL, doubled year over year to CNY 118 billion, in line with our expectation. Net profit for the quarter increased 61% year over year to CNY 13.1 billion, at the midpoint of the preliminary announcement. We maintain our fair value estimate at CNY 433, which implies a forward P/E ratio of 25.8 times.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to Frost & Sullivan, CATL is ranked first in the global EV battery market with a market share of 33% as measured by installed capacity in 2021 and 52% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Xpeng, Geely, SAIC, and Volkswagen.

Narrow-moat Contemporary Amperex Technology, or CATL, will report fourth-quarter and full-year results after market close on March 9. We forecast the company to report 51% year-over-year growth in fourth-quarter net profit, driven by electric vehicle, or EV, battery sales and margin recovery from the trough-level first quarter last year. We estimate net profit to grow by 88% year over year for 2022. With faster capacity expansion partially offset by slightly lower EV battery price and margin assumptions, we lift our 2023-24 net profit forecasts by 4%-8%. We raise our fair value estimate to CNY 433 per share from CNY 424. Our fair value implies a forward price/earnings ratio of 25.8 times, which is justified by 49% three-year net profit CAGR.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to Frost & Sullivan, CATL is ranked first in the global EV battery market with a market share of 33% as measured by installed capacity in 2021 and 52% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Xpeng, Geely, SAIC, and Volkswagen.

Contemporary Amperex Technology, commonly known as CATL, is the largest producer of lithium-ion rechargeable batteries for electric vehicles in China and globally. According to Frost & Sullivan, CATL is ranked first in the global EV battery market with a market share of 33% as measured by installed capacity in 2021 and 52% share in China. CATL’s major customers include most of the leading automakers such as Tesla, Nio, Xpeng, Geely, SAIC, and Volkswagen.

We initiate coverage on Contemporary Amperex Technology, commonly known as CATL, with a no moat rating and fair value estimate of CNY 424 per share. As the largest lithium-ion battery producer, we believe CATL will continue to benefit from the global vehicle electrification trend. Our fair value estimate implies a forward price/earnings ratio of 27 times, which is justified by 47% three-year net profit CAGR.