CALB Battery Cell Lacks Adequate Output; Certain Huawei Luxeed Models Transition to CATL Batteries: Report

The analyst rating for CATL (03750.HK) is "High Conviction Outperform," as reiterated by CLSA. The reasons for this rating include: 1. Market Concerns Reflected in Valuation: CATL's current estimated PE ratios of 17x for A-shares and 22x for H-shares already account for most of the market's concerns regarding growth prospects, such as the slowdown in China's EV sales, rising lithium prices, and reduced export VAT rebates on batteries. 2. Strong Earnings Growth Forecast: CLSA forecasts a 31% compound annual growth rate (CAGR) in earnings per share (EPS) for 2025-2027, suggesting that the company's growth potential remains strong despite current headwinds. 3. Valuation Re-rating Potential: Historically, CATL's A-shares had an average PE ratio of 19x during a downcycle in the battery industry. With a new upcycle anticipated due to structural growth in energy storage batteries, CLSA believes CATL's valuation should be re-rated to exceed this historical average. 4. Attractive Risk-Reward Profile: Given the expected earnings growth and the current valuation, CLSA considers the risk-reward profile for CATL to be attractive, supporting their positive outlook on the stock. Overall, these factors contribute to CLSA's positive rating and target prices of RMB685 for A-shares and $500 for H-shares.

The analyst rating for SIEYUAN ELEC and CATL is based on their recent collaboration on energy storage, which is expected to significantly expand SIEYUAN ELEC's energy storage system business. JPMorgan believes that if the collaboration's output is fully realized, it could generate approximately RMB20 billion in annual revenue. This positive outlook has led JPMorgan to set a target price of RMB180 for SIEYUAN ELEC and target prices of $650/RMB520 for CATL's H-/A-shares, all rated at Overweight.