HK Stock Market Move | Battery stocks collectively decline; Contemporary Amperex Technology (03750) faces quarter-on-quarter pressure on profitability in Q3; JP Morgan cuts earnings forecasts for the industry chain.

Battery concept stocks fell collectively in early trading. As of press time, Contemporary Amperex Technology (03750) dropped 9.86% to HK$371.2; Wuxi Lead Intelligent Equipment (00470) fell 5.6% to HK$19.9; CALB (03931) declined 4% to HK$13.44. On the news front, JP Morgan released a research report stating that battery stocks have significantly underperformed over the past few months, initially mainly due to concerns over demand prospects, but the focus has now shifted to profitability. The bank comprehensively lowered its earnings forecasts for the battery industry chain, increasingly concerned that industry profitability is deteriorating faster than expected, while a broader profit redistribution is emerging across the electric vehicle industry chain. It cut Contemporary Amperex Technology's target price from HK$725 to HK$500, CALB's target price from HK$40 to HK$17, and Wuxi Lead Intelligent Equipment's target price from HK$45 to HK$22, downgrading all three ratings from "Overweight" to "Neutral." On October 21, Contemporary Amperex Technology's A-shares and H-shares both fell sharply, with the Hong Kong-listed shares plunging nearly 10% intraday, halving from their June high. The company's third-quarter report disclosed last night showed that Q3 net profit attributable to shareholders was RMB 21.246 billion, up only 14.54% year-on-year and down about 5.8% quarter-on-quarter from Q2. The lower-than-expected Q3 profit was mainly affected by changes in product mix, cuts to export tax rebates, and consumption tax.