UBS: Contemporary Amperex Technology (03750) benefits from cost and technological advantages, multiple growth opportunities target price raised to HK$660

UBS released a research report stating that it has raised its battery sales forecast for Contemporary Amperex Technology (03750) in the next two years by 5% to 7% to 829 to 1,044 gigawatt-hours, and has also raised its net profit forecast by 5% to 7%. Based on the unchanged forecast price-to-earnings ratio for 2026, the target price has been raised from HK$640 to HK$660, with a "buy" rating. UBS's 2026 battery teardown report covers Contemporary Amperex Technology's Shenyan supercharging battery, Kirin battery, etc., and finds that the group maintains cost competitive advantage in both domestic and overseas production. Based on the teardown results, it is estimated that the cost of the same type of battery produced by Contemporary Amperex Technology in Hungary may be 10 to 15 US dollars per kilowatt-hour higher than that produced in China, but it is expected that the operating profit margin of the Hungarian factory will be similar to that of domestic factories. It is believed that the group's leadership position in global cost, scale, and technology will enable it to benefit from multiple growth opportunities in the acceleration of electrification in the electric vehicle, energy storage system, and new application fields. UBS forecasts that the cost curve of Contemporary Amperex Technology in its Hungarian factory will be lower than that in Germany, and predicts that the operating profit margin of its Hungarian factory will be largely consistent with its domestic business, primarily due to benefits from premium pricing in the European market, highly automated production, and only moderate increases in labor costs. With a leading and continually growing global market share, it is believed that the group is best positioned to benefit from the deepening global penetration of electric vehicles, the acceleration of electrification in commercial vehicles, and the expansion of applications in energy storage systems, data centers, and Siasun Robot & Automation. It is forecasted that the group's revenue and profit compound annual growth rates from 2024 to 2029 will be 20% and 25%, respectively.