CATL(SZ:300750)2025-04-21 03:00Investment Rating - The report assigns an "Overweight" rating to CATL, indicating a positive outlook for the company within the battery supply chain [2]. Core Insights - CATL's 1Q25 results exceeded expectations, with management reporting strong demand despite US tariffs. The company operates at a high capacity utilization rate and has raised its price target to Rmb330 per share [2][11]. - The company's net profit margin reached an all-time high of 16.5% in 1Q25, attributed to improved unit economics and margins [8][10]. - CATL's market share in China is expected to improve, with continued gains anticipated in the European market [11]. Financial Performance - 1Q25 battery shipments exceeded 120 GWh, with EV batteries accounting for approximately 80% of total shipments [18]. - Revenue for 1Q25 was Rmb 84.7 billion, reflecting a 6% year-over-year increase, while net profit was Rmb 13.96 billion, a 33% increase year-over-year [32]. - The adjusted EPS for 2025 is revised to Rmb 13.92, reflecting a 20.2% growth compared to the previous year [30]. Market Dynamics - The US market represents only a low-single-digit percentage of CATL's total volume, and most contracts are on an FOB basis, meaning customers bear the additional import tariffs [8][20]. - Management confirmed that over half of CATL's energy storage system (ESS) shipments are now AC-side solutions, which have longer revenue recognition timelines [8][22]. Valuation - The price target of Rmb 330 is based on a 20x P/E ratio for 2026E, which is at the lower end of the company's historical range due to slower industry growth [12][11]. - The report indicates that CATL's valuation is currently trading below its historical averages, suggesting potential upside [12][11]. Strategic Initiatives - CATL plans to build 1,000 battery swapping stations in 2025, with partnerships established with companies like Sinopec and Nio [26]. - The company is focusing on expanding its presence in the commercial vehicle (CV) battery market, expecting demand to outpace passenger vehicle (PV) demand due to policy support [27].