CATL(SZ:300750) Hua Er Jie Jian Wen·2025-10-23 07:03Core Viewpoint - UBS significantly raised the target price for CATL's Hong Kong stock from HKD 495 to HKD 640, citing electric heavy trucks and energy storage systems as key growth drivers for the company [1][4]. Group 1: Growth Drivers - The normalization of lithium prices and the decline in battery costs have made battery applications more economically viable, opening up key markets [4]. - Improvements in battery swap infrastructure for electric heavy trucks are making them more popular, while the demand for energy storage is being driven by traditional renewable energy installations and a new surge in demand from AI data centers [4][5]. - UBS has increased its profit forecasts for CATL by 7% and 11% for 2025 and 2026, respectively, expecting battery sales to reach 638 GWh and 790 GWh in those years [4]. Group 2: Profitability and Sales Expansion - Future profit growth for CATL is expected to rely more on sales expansion rather than an increase in unit profit margins, with a net profit margin of 17.8% and a stable unit profit of RMB 112 per kWh as of Q3 2025 [5][6]. - The company’s growth engine will be driven by actual shipment volumes rather than cost compression [5]. Group 3: Market Share and Storage Demand - Investors are advised to closely monitor CATL's market share in the domestic electric vehicle market, which has decreased by 3 percentage points this year due to capacity constraints and the rise of budget electric vehicles [7]. - Despite potential challenges from a 25% tariff on storage products planned by the U.S. in 2026, CATL is expected to remain largely unaffected due to strong demand from AI data centers and its competitive position in storage products [7]. Group 4: Valuation Logic - UBS has revised CATL's valuation method, increasing the price-to-earnings ratio from 26x to 30x, aligning it with the average valuation levels of other tech leaders like BYD, LG Energy, Xiaomi, TSMC, and Tencent [9]. - This new benchmark reflects CATL's global technological leadership and the anticipated growth in the European market following the launch of its Hungarian factory in early 2026 [9].