UBS: Raise Contemporary Amperex Technology (03750) target price to HK$640, Increase earnings forecast for this year and next.

UBS released a research report stating that the target price of Contemporary Amperex Technology (03750) has been raised from 495 Hong Kong dollars to 640 Hong Kong dollars, equivalent to a forecasted P/E ratio of 30 times for next year. The rating "Buy" is maintained, while the profit forecast for 2025 and 2026 is respectively raised by 7% and 11%, with projected battery sales of 638 and 790 gigawatt-hours for the group. The bank believes that from a valuation perspective, Contemporary Amperex Technology A-shares (300750.SZ) are more attractive. The bank mentioned that in recent years, the use of batteries in the electric heavy truck and energy storage (ESS) industries has become cheaper, due to improvements in battery swapping facilities for electric heavy trucks, as well as the growth in demand for energy storage driven by wind power and CECEP Solar Energy installations, and the growth in demand from AI data centers. On the other hand, the bank expects the growth in demand for domestic electric vehicle batteries to slow down, as subsidies for electric vehicles will be phased out starting next year. However, the bank believes that the acceleration of electric vehicle exports, coupled with ongoing capacity expansion overseas, will support the international expansion of Contemporary Amperex Technology. In terms of profitability, the bank points out that Contemporary Amperex Technology's net profit margin in the third quarter has reached 17.8%, with a unit profit of 112 RMB per kilowatt-hour; it is expected that future profit growth will come more from sales volume increases rather than margin expansion.