Contemporary New Energy Technology Company (CATL) is a low-key giant in the field of electric vehicles. It is the largest stock by market capitalization in the largest stock index traded on the Shenzhen exchange, even larger than BYD’s locally listed shares. CATL is a major supplier of electric vehicle batteries to all the big industry players, from BMW to Tesla. BYD produces its own batteries. China’s stock market has been sluggish throughout the year, and CATL is no exception, with a cumulative decline of nearly 13% throughout the year. But stock analysts believe CATL shares are still a long way from Friday’s closing price of 189.03 yuan ($26.25). This is despite an ongoing EU investigation into the role of subsidies in Chinese electric vehicle production. Nomura Securities analysts said in a report on November 6, “Due to CATL’s first-mover advantage in localized production in the EU, we maintain a buy rating on CATL.” They have a neutral rating on two other battery stock picks. Nomura Securities’ target price is 315 yuan, an increase of nearly 67% from last Friday’s closing price. For many analysts, the fact that CATL is already producing in Europe offsets geopolitical risks. “We believe technology leadership and strong production commitments, especially in the EU, can help better weather trade/tariff/FX uncertainties such as the recent EU anti-subsidy investigation) and further expand its overseas market share.” reported CATL on the 24th. Even after lowering the target price on the stock with a buy rating, analysts still set the target price at 266 yuan, which is an increase of more than 40% from Friday’s closing price. “According to the company’s financial report conference call, its first European factory in Thuringia (planned annual production capacity of 14GWh) has been steadily increasing since it was put into operation in January 2023, and the first phase of the Hungarian factory has a planned annual production capacity of 34GWh (total 100GWh). Under construction,” the HSBC report said. The third-quarter financial report released by CATL on October 19 slightly disappointed analysts. Revenue for the quarter was 105.43 billion yuan, lower than the FactSet forecast of 112.31 billion yuan, while net profit was also 10.43 billion yuan, lower than the expected 12.16 billion yuan. Analysts at Jefferies said: “CATL continues to gain overseas share from major European OEMs such as Volkswagen, BMW, Mercedes-Benz and others as they win contracts for major electric vehicle launches in 2026. We CATL’s overseas market share is expected to continue to rise.” Report on October 19. Analysts said: “Despite market oversupply and fierce competition, CATL has demonstrated the ability to maintain good profitability through better technology and cost advantages.” Their target price is 284 yuan, up 50% from Friday’s closing price . More products are about to be launched. According to data from Counterpoint Research, the company already accounts for more than one-third of the global electric vehicle battery market, and more products are about to be launched. “CATL has achieved breakthroughs in sodium-ion battery chemistry, and we expect to see mass adoption of these batteries soon,” Counterpoint Research’s Peter Richardson said in a report on Wednesday. “The Chery iCar One of the brand’s models is expected to be equipped with CATL’s sodium-ion battery and be launched in early 2024.” Batteries are the most expensive component in electric vehicles. Lower battery costs, faster charging and longer driving range all help make electric vehicles more attractive to consumers. Li Auto posted record deliveries in October, beating Tesla, and in December launched its first purely battery-powered car – powered by a new CATL battery called Kirin. UBS analysts gave a target price of 400 yuan per share on October 19, partly due to the fast-charging Kirin batteries and similar new products of Chinese electric vehicle brands Avatar and Chery. That’s 111%, or more than double, of CATL’s closing price on Friday. Analysts at UBS also pointed out that CATL expects fourth-quarter deliveries to improve from the third quarter, noting that its lithium mine in Jiangxi has been put into production. —CNBC’s Michael Bloom contributed to this report.
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