CATL(SZ:300750)2024-06-13 03:35Investment Rating - The report maintains a "Buy" rating for CATL, with a 12-month price target of Rmb304.00, while the current price is Rmb188.77 [1]. Core Insights - Concerns regarding downside risks from Tesla's battery price renewal are considered overstated, as CATL is expected to remain a significant earnings contributor to Tesla, with contributions projected to increase to approximately 11% from 2024 to 2026, up from 8%-10% during 2021-2023 [1][12]. - CATL's battery sales to Tesla are reportedly at discounts to average prices, with estimates showing sales at 9%/17%/17% below average prices in 2021/22/23, indicating limited downside risks [2][14]. - The growth of Energy Storage Systems (ESS) is expected to be a key driver for CATL's battery shipments, with a forecasted 58% CAGR for ESS shipments, which will help offset near-term EV battery headwinds [3][24]. Summary by Sections Financial Projections - Revenue projections for CATL are Rmb400.9 billion in 2023, Rmb396.8 billion in 2024E, Rmb500.7 billion in 2025E, and Rmb624.0 billion in 2026E [5][11]. - EBITDA is expected to grow from Rmb66.8 billion in 2023 to Rmb136.3 billion in 2026E [11]. - Net income is projected to increase from Rmb44.1 billion in 2023 to Rmb100.3 billion in 2026E [11]. Market Position and Competitive Landscape - CATL is positioned as a leading player in the battery market, with a market cap of Rmb830.4 billion and an enterprise value of Rmb645.4 billion [4]. - The report highlights CATL's strong partnership with Tesla, which has evolved over the years, focusing on joint R&D in fast-charging batteries as the next area of collaboration [12][14]. Earnings Contribution from Tesla - Tesla is estimated to contribute 10%-12% of CATL's revenue from 2021 to 2023, with projections indicating an increase to approximately 11% in 2024-2026, supported by around 16% of CATL's total battery shipments [26][28]. - The net profit contributions from Tesla are expected to rise significantly, nearly tripling from Rmb4.4 billion in 2023 to Rmb11.1 billion by 2026 [26].