On-site investigation of Contemporary Amperex Technology (300750.SZ) by Morgan Stanley: the conclusion is that its core competitiveness is too strong and next year's production capacity will reach 1TWh with great potential in energy storage.

Morgan Stanley conducted on-site inspections of Contemporary Amperex Technology (03750, 300750.SZ) and released a report, believing that the company's independently developed manufacturing lines have a high level of complexity and intelligence, coupled with advanced molecular-level materials science, will continue to build high barriers to entry, creating quality premiums and cost competitiveness. According to Morgan Stanley's report, the factory produces 2.2 million battery cells per day, with over 6,800 real-time quality control points, processing 340,000 data transactions per second, creating a smart factory. Contemporary Amperex Technology currently has sufficient orders, with a capacity utilization rate of over 90%, and is building 250GWh of new capacity with the goal of reaching 1TWh of capacity next year. In the energy storage system (ESS) business, Contemporary Amperex Technology's products can bring customers a premium of about 14 percentage points of IRR (internal rate of return) in the global market, and a premium of 7-8 percentage points in the Chinese market. Morgan Stanley believes that Contemporary Amperex Technology has great potential in energy storage. Morgan Stanley maintains a "hold" rating on Contemporary Amperex Technology with a target price of 425 RMB, based on an EV/EBITDA valuation of 15 times expected EBITDA in 2026, representing a 20% upside potential from the current price. Building Core Barriers with Smart Manufacturing After conducting on-site inspections, Morgan Stanley pointed out that Contemporary Amperex Technology's factory sets a high standard for manufacturing efficiency. The capacity to produce 2.2 million battery cells per day, combined with over 6,800 real-time quality control points, ensures high yield and quality premiums. The ability to process 340,000 data transactions per second creates a truly intelligent factory. The report emphasizes that this is the key difference between Contemporary Amperex Technology and other manufacturers: while creating cost advantages, they also have advanced molecular-level materials science. When asked if competitors could replicate Contemporary Amperex Technology's production line through equipment suppliers, Morgan Stanley believes it would be extremely difficult, as the production line contains over 25,000 component units, with a very high level of complexity, and most of them are self-designed. Capacity Expansion Securing Future Orders Contemporary Amperex Technology currently has a capacity utilization rate of over 90% and is building 250GWh of new capacity. According to Morgan Stanley's report, the company aims to reach 800GWh of capacity by 2025 and 1TWh by 2026. With this scale of capacity, the company is expected to meet order demand in the coming years. Overseas capacity expansion is progressing as planned, with projects in Hungary and Indonesia scheduled to start production in 2026, and the project in Spain planned for 2027. The company's management has stated that the profitability of overseas factories is on par with or even better than the domestic market. Additionally, the company expects to achieve small-scale production of solid-state batteries by 2027. Management holds a constructive outlook on the deployment of electric vehicles and energy storage systems next year. Product Upgrades in Energy Storage Business In the competitive landscape of energy storage systems, Contemporary Amperex Technology's products, with first-class decay control and energy efficiency performance, help customers improve project economics. In the global market, compared to other battery manufacturers, they can create a premium of about 14 percentage points in IRR, and have a 7-8 percentage point advantage in the Chinese market. With the improvement of distribution capabilities for system products, the company plans to enhance the product structure of its energy storage business in the coming years, including higher-margin AC system products. This article is reprinted from "Wall Street See News", GMTEight Editor: Jiang Yuanhua.