CATL(300750) Huajing Securities·2024-10-24 06:08Investment Rating - The report maintains a "Buy" rating for the company with a target price raised to RMB 301.00 from RMB 251.30, indicating a potential upside of 19% from the current price of RMB 253.36 [1][5]. Core Insights - The company has exceeded market expectations with a significant increase in gross margin, reaching 31.2% in Q3 2024, driven by a decline in raw material costs and the introduction of new high-margin products [1][3]. - Despite a year-on-year revenue decline of 12.5% in Q3 2024, the company reported a net profit of RMB 13.1 billion, reflecting a 26% increase compared to the previous quarter [2][3]. - The company continues to strengthen its market position through the launch of innovative products, with Q3 2024 battery shipments reaching 125 GWh, of which 20% were for energy storage [1][3]. Financial Performance Summary - Q3 2024 revenue was RMB 92.3 billion, down 12.5% year-on-year but up 6.1% quarter-on-quarter [2]. - Gross profit for Q3 2024 was RMB 28.8 billion, with a gross margin of 31.2%, an increase of 8.7 percentage points year-on-year [2][3]. - The company reported a net profit of RMB 13.1 billion in Q3 2024, a 26% increase from the previous quarter [2][3]. Earnings Forecast - The revenue forecast for 2024-2026 has been adjusted to RMB 363.7 billion, RMB 405.9 billion, and RMB 444.9 billion, respectively, reflecting a downward revision due to declining battery prices [3][4]. - The gross margin is expected to improve to 28.3%, 28.7%, and 29.0% for 2024-2026, respectively, as the company focuses on high-margin products [3][4]. - The net profit forecast for 2024-2026 has been raised to RMB 511.4 billion, RMB 630.5 billion, and RMB 712.3 billion, indicating a year-on-year growth of 15.9%, 23.3%, and 13.0% [3][4]. Valuation - The company is assigned a valuation of 21 times P/E for 2025, compared to an average of 12 times for comparable companies, supporting the target price of RMB 301.00 [5][6].