Date of Report

October 21, 2024

Broker

UOB Kay Hian

Company Overview

Contemporary Amperex Technology (300750 CH) is a Chinese battery manufacturer and technology company specializing in the production of lithium-ion batteries for electric vehicles and energy storage systems, as well as battery management systems (BMS).

Stock Data

• Share Price: Rmb249.89
• Target Price: Rmb350.00
• Upside: +40.1%
• GICS Sector: Industrial
• Shares Issued: 4,399 million
• Market Cap:
  • HK$1,099,276 million
  • US$159,315 million
• 3-Month Avg Daily Turnover: US$795 million
• 52-Week High/Low: Rmb301.50/Rmb138.36

Recent Performance

• 1 Month: +34.1%
• 3 Months: +32.7%
• 6 Months: +29.7%
• 1 Year: +36.1%
• Year-to-Date: +55.3%

Major Shareholders

• Zeng Yuqun (Ruiting Investment): 23.32%
• Huang Shilin: 10.60%

Financial Highlights for Q3 2024

• Revenue: Rmb92.3 billion (-13% year-on-year, +6% quarter-on-quarter)
• Net Profit: Rmb13.1 billion (+26% year-on-year, +6% quarter-on-quarter)
• Gross Margin: 31.2% (+8.7 percentage points year-on-year, +4.5 percentage points quarter-on-quarter)

Earnings Review

• Core Net Profit: Rmb12.1 billion in Q3 2024, which is a 29% increase year-on-year and a 12% increase quarter-on-quarter.
• 9M 2024 Net Profit: Rmb36.0 billion (+16% year-on-year).
• Sales Volume of Lithium-Ion Batteries: 125 GWh in Q3 2024, representing a 25% increase year-on-year.

Key Financial Metrics

• FY24 NAV/Share: Rmb37.8
• FY24 Net Debt/Share: Rmb25.4

Stock Impact and Future Outlook

• Earnings driven by the ramp-up of new battery products.
• Maintenance of 2024-2026 net profit forecasts at Rmb47.9 billion, Rmb59.0 billion, and Rmb71.4 billion respectively.
• Anticipated growth in sales volume of automotive power batteries to 380 GWh in 2024.

Margin Improvement

• Gross Margin Increase: Attributed to a significant drop in lithium carbonate prices, improving gross margin by 8.7 percentage points year-on-year and 4.5 percentage points quarter-on-quarter.

Capital Expenditures and Cash Flow

• Operating cash flow grew 46% year-on-year to Rmb22.7 billion.
• Capex increased 10% year-on-year to Rmb7.4 billion in Q3 2024.

Conclusion

Contemporary Amperex Technology continues to demonstrate strong financial performance, with robust profit growth and a solid outlook for future expansion in the electric vehicle and energy storage markets.