CATL(SZ:300750) SINOLINK SECURITIES·2024-04-19 12:00Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Views - The company is significantly undervalued based on discounted cash flow (DCF) analysis, with various scenarios indicating a valuation center far above the current market value [1][9]. - The company has maintained its position as the global leader in power and energy storage batteries for ten consecutive years, benefiting from strong cost and technology moats [2][3]. - The report highlights the company's ability to generate positive cash flow through various industry cycles, with free cash flow and cash reserves showing consistent growth [2][3]. Summary by Sections Investment Logic - The company is in a high-growth phase, with operating cash flow increasing annually, reaching eight times the level of 2018 in 2023 [1]. - The market's valuation of the company is subject to significant fluctuations due to marginal changes, making it difficult to reflect the true long-term value [1]. Profit Forecast, Valuation, and Rating - The company is projected to achieve profits of 47 billion, 54 billion, and 62 billion RMB from 2024 to 2026, with year-on-year growth rates of 6.5%, 15.4%, and 15.0% respectively [3]. - The price-to-earnings (P/E) ratios for 2024 and 2025 are estimated at 18x and 16x, respectively [3]. Industry Analysis - The global automotive market is experiencing a strong recovery, with nearly 90 million vehicles sold in 2023, reflecting a year-on-year growth of 9.7% [12]. - The report discusses the rapid growth of the electric vehicle (EV) market, with various automakers setting ambitious electrification targets [12][16]. Company Profitability Analysis - The company has a robust profitability structure, with a projected return on equity (ROE) of 22.32% in 2023, significantly higher than its peers [5]. - The report outlines different profitability scenarios, indicating that even under pessimistic conditions, the company's cash flow remains strong [2][9]. DCF Valuation Model Breakdown - The DCF model indicates that under extreme zero-growth scenarios, the company's valuation could exceed 1.1 trillion RMB, suggesting that the current market value is at an absolute bottom [2][9]. Financial Report Analysis - The company's revenue is projected to grow from 328.6 billion RMB in 2022 to 582.5 billion RMB in 2026, with a compound annual growth rate (CAGR) of approximately 14.97% [5]. - The net profit is expected to increase from 30.7 billion RMB in 2022 to 62.3 billion RMB in 2026, reflecting a strong growth trajectory [5]. Historical Performance & Profit Forecast - The report emphasizes the company's consistent performance and growth potential, reinforcing the investment thesis for long-term value appreciation [3][5].