Lyon: Raised Contemporary Amperex Technology (03750) target price to HK$740, with stable performance in the first quarter, reiterating a "high conviction outperforming the market" rating.

Lyon releases research report stating that the target price of Contemporary Amperex Technology (03750.HK) H shares has been raised from 710 Hong Kong dollars to 740 Hong Kong dollars; the target price of Contemporary Amperex Technology (300750.SZ) A shares has been increased from 505 RMB to 515 RMB; reiterates high conviction outperform rating. Contemporary Amperex Technology's net profit in the first quarter of this year increased by 49% year-on-year to 2.07 billion RMB, down 10% quarterly. The bank believes that despite the rise in lithium prices since the beginning of the year, the company is still able to withstand challenges and achieve slightly better-than-expected performance in the first quarter. The report mentioned that the company's gross profit margin in the first quarter was 24.8%, an increase of 0.4 percentage points year-on-year and a decrease of 3.4 percentage points quarterly, slightly below expectations but better than market concerns. It is expected that 2026 will be the bottom of the gross profit margin, and from the second quarter onwards, cost transfer will drive an improvement in gross margin. The bank has raised the group's earnings per share forecast for 2026 to 2028 by 2% to 3%.