JP Morgan: Contemporary Amperex Technology (03750) stock price may experience a short-term correction with a target price of 400 Hong Kong dollars. The "hold" rating is maintained.

JPMorgan Chase released a research report stating that although Contemporary Amperex Technology's H shares (03750) remain its top choice in the Chinese battery industry, the stock price is expected to pull back in the short term after a significant increase in recent weeks (up 30% in the past two weeks), maintaining a target price of HK$400 and a "overweight" rating. The bank stated that the company's capacity growth in recent months is the highest in the industry. Although advisor feedback indicated a slight decline in capacity in mid-July, overall growth remains robust and higher than expected. In addition, the bank expects second-quarter earnings to exceed expectations, with sales expected to be 140 to 150 gigawatt hours and net profit to increase by 25 to 30% year-on-year to 15.5 to 16 billion RMB, with unit economics similar to the first quarter. As for the impact of the US "Inflation Reduction Act" (IRA) tax relief restrictions on the company's technology licensing business (LRS), the bank pointed out that although both partners Tesla and Ford recently released positive news, the act mentions that agreements signed after the act's implementation may not qualify for tax relief. Therefore, it is expected that aside from the existing agreements with Tesla and Ford, there may not be any new technology licensing agreements in the US in the future.