Morgan Stanley has issued a research report stating that it has downgraded its rating on CATL (3750.HK) Hong Kong shares from Overweight to In-Line, with its target price slashed by 44.7% to HK$390.
While the brokerage has maintained its Overweight rating on the company's A-shares (300750.SZ), it has removed the stock from its list of top picks, cutting the target price by 33% to RMB335.
Morgan Stanley noted that although the company achieved strong year-on-year revenue growth of 59% in the third quarter, fully demonstrating its leading advantages in shipment scale and market share, the dramatic fluctuations in its product mix exceeded expectations, leading the market to previously overestimate its profitability.
Under the combined impact of multiple factors including lithium inventory losses, foreign exchange losses, consumption tax, reduced VAT rebates, customer rebates, and changes in product structure, CATL's third-quarter unit net profit decreased by approximately RMB29 per kilowatt-hour on a quarter-on-quarter basis.
The brokerage added, however, that if these one-off and reversible items are excluded and added back, the company's true underlying unit net profit performance has still maintained strong resilience.
Based on the above financial changes, Morgan Stanley has lowered its net profit forecast for CATL this year by 6% to RMB89.4 billion, while cutting its earnings forecasts for 2027 and 2028 by 7% and 10% respectively.
Morgan Stanley believes that although the company's H-shares may still face severe volatility over the next three months given the possibility of further narrowing of the H/A share premium, the brokerage remains optimistic about the company's long-term prospects, bullish on the doubling of the addressable global electrification market outside the United States over the next five years, the gradual rollout of sodium battery product cycles, and the sound progress of the battery swapping alliance.
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