Bank of America Raises CATL Price Target to HK$775 After Q2 Results Meet Expectations

Stock News07-27

Bank of America Securities has issued a research report raising the H-share target price for CATL (03750) from HK$770 to HK$775, while the A-share target price for Contemporary Amperex Technology Co., Limited (300750.SZ) has been increased from RMB 596 to RMB 599. The firm maintains a "Buy" rating.

CATL reported second-quarter revenue of RMB 148 billion, a 57% year-on-year increase and a 14% sequential rise, surpassing the bank's estimate by 13%. Gross margin stood at 23.2%, a decrease of 2.4 percentage points year-on-year and 1.7 percentage points sequentially, falling short of the 24.8% forecast. Net profit reached RMB 22.5 billion, up 37% year-on-year and 9% quarter-on-quarter, broadly in line with market expectations. The quarter included a foreign exchange loss of approximately RMB 1.1 billion; excluding this impact, net profit for the second quarter would have been RMB 23.6 billion, a 58% year-on-year gain and a 5% sequential increase.

Bank of America noted that electric vehicle battery sales in the first half totaled RMB 192 billion, a 46% year-on-year increase, with a gross margin of 20.6%, down 1.8 percentage points year-on-year. Energy storage system sales reached RMB 53.3 billion, an 88% year-on-year jump, with a gross margin of 24%, down 1.6 percentage points year-on-year. Management expects demand growth to remain strong from the second half onward, driven by commercial vehicles and energy storage systems. The impact of export tax rebate reductions and consumption taxes will be shared between the company and its customers, with unit profitability remaining broadly stable.

CATL also announced an A-share buyback plan of RMB 20 billion to RMB 40 billion, equivalent to 0.75% to 1.51% of issued shares, with the repurchased shares to be cancelled. In response to the quarterly results and an upward revision in energy storage system shipment forecasts, Bank of America has made minor adjustments to its 2026 to 2028 earnings per share estimates, with reductions of 0.8% and 0.6% for 2026 and 2027 respectively, and a 3.2% increase for 2028.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment