CATL Will Continue to Face Margin Pressure

Dow Jones10-23

0305 GMT - Contemporary Amperex Technology will likely continue to face margin pressure, says Bernstein analysts in a note. Its 3Q earnings missed expectations as profitability weakened despite strong shipment growth, they say. The decline was mainly driven by consumption taxes and an unfavorable product mix, among others. Investors were disappointed by CATL's ability to pass-through increased costs in 3Q and are more concerned about CATL's earnings particularly in a more severe tax environment next year, they add. CATL's operating margin could trend toward around 10% in 2027 and 2028 from about 20% currently, Bernstein says. The brokerage maintains an outperform rating for the stock but cuts its target price to HK$460 from HK$740. It cut its Shenzhen-listed shares target price to 480 yuan from 770 yuan.

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