Contemporary Amperex Technology, better known as CATL, is an understated giant in the world of electric vehicles. It is the largest stock by market capitalization in the index of largest stocks traded on the Shenzhen Stock Exchange – even larger than BYD’s local listing. CATL is a major supplier of electric car batteries to all major industry players from BMW to Tesla. BYD makes its own batteries. Chinese stocks have been in the red all year, and CATL is no exception, down nearly 13% year to date. However, stock analysts believe CATL shares still have a long way to go from their closing price of 189.03 yuan ($26.25) on Friday. This is despite an ongoing European Union investigation into the role of subsidies in Chinese electric vehicle production. “We maintain our Buy rating on CATL due to its first-mover advantage in localized production in the EU,” Nomura analysts said in a Nov. 6 report. Their other two battery stocks received a neutral rating. Nomura has a price target of 315 yuan – representing an increase of nearly 67% from Friday’s close. For many analysts, the fact that CATL already produces in Europe offsets geopolitical risks. “We believe that technology leadership and strong manufacturing commitment (particularly in the EU) could help it better manage trade, customs and foreign exchange uncertainties (e.g. the recent EU anti-subsidy investigation) and further expand market share abroad “said HSBC analysts in an October note. 24 Report on CATL. Even after lowering their price target on the Buy-rated stock, analysts have a price target of 266 yuan – just over 40% higher than at Friday’s close. “According to the company’s earnings release, its first European plant in Thuringia (planned annual capacity 14 GWh) has been ramping up smoothly since production began in January 2023, and its Hungarian plant with Phase I planned annual capacity of 34 GWh (total 100 GWh) is already in progress.” also in Construction,” the HSBC report said. CATL slightly disappointed analysts with its third-quarter earnings release on October 19. Quarterly revenue came in at 105.43 billion yuan, below FactSet’s forecast of 112.31 billion yuan, while net profit of 10.43 billion yuan also fell short of expectations of 12.16 billion yuan. “CATL continues to gain share overseas with key European OEMs such as VW, BMW, Mercedes-Benz etc. as they have secured orders for major electric launches in 2026 and we expect CATL’s overseas market share to continue to grow “said analysts at Jefferies in an Oct. 19 report. “Despite market oversupply and competition, CATL demonstrates the ability to maintain reasonable profitability through better technology and cost advantages,” the analysts said. They have a price target of 284 yuan, representing a 50% increase from Friday’s close. More products coming to market The company already has just over a third of the global electric vehicle battery market, according to Counterpoint Research, and more products are in the pipeline. “CATL has already made a breakthrough in the chemistry of sodium-ion batteries, and we expect such batteries to be deployed on a large scale very soon,” Peter Richardson of Counterpoint Research said in a note on Wednesday. “A model of Chery’s iCar brand is expected to be equipped with CATL’s sodium-ion battery and go on sale in early 2024,” he said. Batteries are the most expensive component of electric cars. Reducing battery costs, improving charging speeds and extending range are helping to make electric cars more attractive to consumers. Li Auto, which reported record deliveries that beat Tesla in October, is launching its first all-battery vehicle in December – with a new CATL battery called Qilin. Citing the Qilin fast-charging battery and similar new products for Chinese electric car brands Avatr and Chery, UBS analysts on Oct. 19 announced a price target of 400 yuan per share. That’s 111%, more than double when CATL closed on Friday. UBS analysts also noted that CATL forecast an improvement in shipments for the fourth quarter compared to the third, noting that the Jiangxi lithium mine had already entered production. —CNBC’s Michael Bloom contributed to this report.
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