CATL(SZ:300750) GF SECURITIES·2024-07-31 03:31Investment Rating - The report maintains a "Buy" rating for CATL (300750 SZ) with a target price of CNY 307 23 per share based on a 26x PE valuation for 2024 [2][4] Core Views - CATL's performance continues to exceed expectations with H1 2024 revenue of CNY 1667 67 billion (-11 88% YoY) and net profit of CNY 228 65 billion (+10 37% YoY) [2] - The company's Q2 2024 revenue was CNY 869 96 billion (-13 18% YoY +9 06% QoQ) with a gross margin of 26 64% (+4 68pct YoY +0 22pct QoQ) [2] - CATL's overseas market share reached 26 85% from Jan-May 2024 with a slight decline of 0 48pct YoY [2] - The company is expected to achieve a 50% market share in Europe by 2025 and a global share of 40 4% [2] Financial Performance - CATL's battery shipments reached 107GWh from Jan-May 2024 a 31 13% YoY increase [2] - The company's gross margin for H1 2024 was 26 53% (+4 9pct YoY) with Q2 gross margin at 26 64% (+4 68pct YoY +0 22pct QoQ) [12] - R&D expenses for H1 2024 were CNY 8 592 billion (-12 77% YoY) with an R&D expense ratio of 5 15% (-0 05pct YoY) [14] Overseas Expansion - CATL's overseas expansion is progressing with a focus on Europe and the US The company's LRS model is expected to drive a market share inflection point in the US by 2026 [2] - The company's factories in Hungary and Michigan are expected to boost its global market share in the long term [2] Profitability and Valuation - CATL's unit depreciation is expected to decrease from CNY 0 05/Wh in 2023-2024 to CNY 0 034/Wh by 2026 providing more profit elasticity [17] - The company's sales rebates for H1 2024 are estimated at CNY 2 65 billion with CNY 660 million in Q2 [18] - EPS for 2024-2026 is forecasted at CNY 11 82 13 20 and 15 16 per share respectively [2] Market Position and Strategy - CATL's Shenxing battery technology is driving a new cycle of fast-charging electric vehicles with a 10-minute charge providing 400km of range [10] - The company is expected to achieve a nominal production capacity of 740GWh 836GWh and 1000GWh by the end of 2024 2025 and 2026 respectively [22] - CATL's global market share is projected to reach 40 4% by 2025 driven by its strong position in Europe and China [20]