First Read: Contemporary Amperex Technology "Share price correction &..."

Research evidence excerpt

First Read: Contemporary Amperex Technology "Share price correction &..."

g more rebates amid

12/27E 27.28 25.31

their own margin pressure. Recall on the Q1 earnings call, management indeed 12/28E 31.97 29.89

admitted some margin pressure and challenges passing on the cost inflation, we thus

think a moderate unit-profit softening is possible. Our forecast assumes 230GWh Paul Gong

delivery and Rmb24bn net profit for Q2; if we assume slightly more rebates to the Analyst

downstream after Q2's EV volume recovery, it could potentially come to 240GWh paul.gong@ubs.com

+852-2971 7868

delivery and Rmb23bn net profit.

Xinyu Fang, CFA

Cooling down of ESS sentiment amid AIDC Analyst

xinyu.fang@ubs.com

Another concern we have heard among investors is the downward revision of ESS amid +852-2971 8007

recent AIDC sentiment cooldown. While we do not want to take a strong view on ESS

given our stronger EV expertise, we believe ESS projects have relatively long planning Edwin Hui

Associate Analyst

time thus not as volatile as share prices of AI stocks. More importantly, a significant

edwin.hui@ubs.com

majority of CATL's ESS remains power-grid applications, and ESS accounts for only a +852-29-71 8849

quarter of its total battery output anyway.

Valuation:

CATL H & A are trading at 24/20x and 15/13x 26/27E P/E. Looking through near-term

volatilities, we believe valuation remains attractive especially on the A-share side.

Highlights (Rmbm) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 400,917 362,013 423,702 664,974 780,797 893,488 1,005,261 1,113,792

EBIT (UBS) 39,271 45,281 61,859 107,420 131,719 156,908 183,373 209,777

Net earnings (UBS) 44,121 50,745 72,201 103,899 124,521 145,905 168,394 191,517

EPS (UBS, diluted) (Rmb) 10.03 11.53 16.10 22.77 27.28 31.97 36.90 41.96