CICC: Initiate Contemporary Amperex Technology (03750) with outperform rating, target price of 580 Hong Kong dollars.

Zhongjin released a research report stating that it is expected that Contemporary Amperex Technology (03750) will have EPS of 15.27 yuan and 19.74 yuan in 2025-2026, with a CAGR of 31.6% from 2024 to 2026. The stock is currently trading at a P/E of 23.1X in 2026. It has given a favorable industry rating for the first time, with a target price of 580.0 Hong Kong dollars for the stock listed in Hong Kong, corresponding to a P/E of 26.5X in 2026, with an upside potential of 14.9%. At the same time, the bank maintains its outperform industry rating for the A-share listed (300750.SZ) company with an unchanged target price of 445 yuan. The A-share stock is currently trading at a P/E of 19.4X in 2026, and the target price corresponds to a P/E of 23.1X in 2026, with a 19.0% upside potential. Key points from Zhongjin: Contemporary Amperex Technology is tapping into the growth potential of overseas markets. The bank believes that the overall growth potential of overseas new energy vehicle and energy storage markets is significant, with regions such as Europe and the United States implementing localization policies and geopolitical risks intensifying. It is imperative for Chinese companies to expand their overseas production capacity. Contemporary Amperex Technology's global layout is at the forefront of the industry, and the bank expects its overseas production capacity to gradually release between 2025 and 2027, supporting accelerated international business expansion. Emerging application scenarios are constantly emerging, driving continuous growth in lithium battery demand. The bank believes that the application of lithium batteries in new scenarios such as electric aircraft, ships, construction machinery, and data centers is accelerating, and is expected to continue to drive demand in the medium to long term. These emerging application scenarios present higher barriers in terms of technology, safety, and reliability. The company leads in product layout in emerging fields. Contemporary Amperex Technology's competitive advantage is solid, with excellent profitability and industry-leading technology. Since 2022, the company has maintained a leading profitability level in the industry due to its strong bargaining power throughout the industrial chain, advantages in customer/product structure, equipment utilization rate, and other aspects. The companys research and development covers the entire industry chain, closely following industry trends, and leading in products and technology. The company is a rare target with high dividend yield and high ROE, prudent financial management, and solid profit safety net. In terms of accounting treatment, Contemporary Amperex Technology is prudently reserved for depreciation, sales service fees, sales cash back, and impairment provisions, forming a solid profit safety net. The bank expects that the gradual reversal of subsequent sales service fees and sales cash back provisions will help increase profits. The company focuses on shareholder returns and has maintained a high dividend payout ratio level for the past 23 years. Investment recommendation The market is concerned about the long-term market share and profit stability, but the bank believes that the company's international business and production capacity expansion will stabilize its long-term market share. At the same time, with strong bargaining power in the industrial chain, product and customer structure optimization, and continuous premium for new product iteration, the profit level is expected to rise steadily. Potential catalysts include downstream new energy vehicle and energy storage demand exceeding expectations, as well as the company's performance exceeding expectations.