Northeast Securities initiated coverage on Contemporary Amperex Technology Co., Ltd. (CATL) (03750), granting it an "Add" rating. The company delivered robust performance in the first three quarters of 2025, achieving dual growth in both revenue and net profit, alongside stable cash flow. This growth was primarily driven by the expansion of its power battery business in overseas markets and deep collaborations with leading international automakers. Furthermore, profitability in its energy storage segment improved, and the launch of innovative, large-capacity products helped maintain its technological edge. The company's capacity is steadily expanding both domestically and internationally, ensuring ample momentum for future growth. The main viewpoints from Northeast Securities are as follows: Revenue and profit recorded high growth, with stable cash flow. In Q1-Q3 2025, the company reported operating revenue of 283.07 billion yuan, a year-on-year increase of 9.28%; net profit attributable to shareholders reached 49.03 billion yuan, surging 36.20% year-on-year. This strong performance was mainly attributable to robust demand in both power and energy storage batteries, coupled with successful overseas market expansion. The net cash flow from operating activities for Q1-Q3 2025 was 80.66 billion yuan, up 19.6% year-on-year, indicating stable cash flow. Power battery business demonstrated steady growth, with overseas markets contributing significantly. In H1 2025, the power battery segment generated revenue of 131.57 billion yuan, increasing 16.80% year-on-year, with overseas markets being the core growth driver. Benefiting from deep partnerships with major international automakers such as Volkswagen, BMW, Mercedes-Benz, and Stellantis, CATL's market share in Europe continued to rise. Overseas revenue for H1 2025 amounted to 61.21 billion yuan, up 21.14% year-on-year. Energy storage battery profitability improved, with technological iterations maintaining a leading position. In H1 2025, the energy storage battery business reported revenue of 28.40 billion yuan, a slight decrease of 1.47% year-on-year. However, the gross margin reached 25.52%, an improvement of 1.11 percentage points year-on-year, signaling enhanced profitability. Additionally, the company continued to launch innovative products in the energy storage sector. It announced the mass production and delivery of a dedicated 587Ah large-capacity energy storage cell, which features comprehensive upgrades in key performance metrics including safety, reliability, energy density, lifecycle degradation, and system efficiency. CATL also launched the world's first mass-producible 9MWh ultra-large capacity energy storage system solution, TENERStack. Compared to traditional 20-foot container systems, this solution significantly improves volume utilization and energy density, thereby boosting the return on investment for user energy storage projects. Capacity construction is progressing steadily, with overseas capacity entering a harvest period. Domestically, the company is advancing the construction of bases in Zhongzhou, Jining, Fuding, and Liyang. Internationally, it is steadily progressing with the construction of its Hungary plant, the joint venture plant with Stellantis in Spain, and the battery industry chain project in Indonesia. The plant in Thuringia, Germany, which commenced operations in 2024, achieved profitability in H1 2025. Equipment installation and commissioning for the first phase of the Hungary plant are underway. The successful listing on the Hong Kong Stock Exchange in H1 2025, which raised HKD 41 billion, provides ample funding for the expansion of overseas capacity. Risk warnings include rising raw material prices; slower-than-expected progress in overseas capacity construction; and performance forecasts and valuations falling short of expectations.
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