CATL(SZ:300750) Ge Long Hui·2025-12-26 03:41Investment Highlights - Company initiates coverage of CATL (03750.HK) with an "outperform" rating and a target price of HKD 580.00, citing the company's proactive exploration of overseas market growth potential [1] - The overall growth potential in overseas electric vehicle and energy storage markets is significant, driven by local policies in Europe and the U.S. and increasing geopolitical risks, necessitating Chinese companies' overseas capacity layout [1] - CATL's global expansion is ahead of the industry, with expectations for overseas capacity to gradually release between 2025 and 2027, supporting accelerated international business growth [1] Emerging Applications - New application scenarios are continuously emerging, driving sustained growth in lithium battery demand, particularly in electric aircraft, ships, construction machinery, and data centers [1] - These new applications present higher barriers in terms of technology, safety, and reliability, with CATL leading in product layout within these emerging fields [1] Competitive Advantages - CATL maintains a solid competitive advantage and exceptional profitability, leveraging strong bargaining power across the supply chain and advantages in customer/product structure and equipment utilization to sustain industry-leading profit levels since 2022 [1] - The company's R&D covers the entire industry chain, keeping pace with industry trends and leading in product and technology [1] Financial Management - CATL is characterized as a high-dividend, high ROE rare asset with prudent financial management and a solid profit safety cushion [2] - The company adopts a cautious approach to accounting treatments, forming a robust profit safety net through provisions for depreciation, sales service fees, sales rebates, and impairments [2] - Anticipated gradual reversal of provisions for sales service fees and rebates is expected to enhance profits [2] Market Position and Growth - The company differs from market concerns regarding long-term market share and profit stability, believing that international business and capacity expansion will stabilize market share in the medium to long term [2] - Strong bargaining power, optimized product and customer structure, and continuous product iteration are expected to support stable profit levels [2] Earnings Forecast and Valuation - EPS forecasts for CATL are projected at CNY 15.27 and CNY 19.74 for 2025 and 2026, respectively, with a CAGR of 31.6% from 2024 to 2026 [2] - The stock is currently trading at 23.1X P/E for 2026, with a target price of HKD 580.00 corresponding to 26.5X P/E, indicating a potential upside of 14.9% [2] - The A-share rating remains "outperform" with a target price of CNY 445, currently trading at 19.4X P/E for 2026, suggesting a 19.0% upside [2]