Goldman Sachs: Upping Ningde Times target price to HK$411, bullish on its growth potential and attractive risk-return ratio

Goldman Sachs published a report stating that it is expected that CATL will achieve a revenue of 104.7 billion yuan in the second quarter of this year, with a net profit of 15.6 billion yuan. They maintain a "buy" rating on CATL's A-shares and Hong Kong stocks, and are optimistic about the company's growth potential and attractive risk-return ratio. The bank maintains a target price of 323 yuan for CATL's A-shares. As for Hong Kong stocks, Goldman Sachs references a 15% premium of CATL's Hong Kong stocks over A-shares in the past month, raising the target price from 343 Hong Kong dollars to 411 Hong Kong dollars. Goldman Sachs believes that CATL's product portfolio improvements support a trend of unit gross profit expansion. Thanks to a 28% year-on-year growth in pure electric vehicle sales in Europe in the first five months of this year, driving battery exports to reach a monthly historical high, CATL's strong overseas shipments have offset headwinds in the Chinese market. Goldman Sachs expects its gross profit margin per kilowatt-hour for mixed battery cells will reach 150 yuan, slightly higher than the 147 yuan in the first quarter of 2025, and predicts that CATL's performance in the second quarter will be positive. The bank points out that, according to recent reports, CATL's progress in new production bases in Luoyang, Shandong, and Fuzhou is faster than expected. Goldman Sachs has raised its capital expenditure forecasts for 2025 and 2027 by 5% and 25% respectively. After the adjustment, Goldman Sachs predicts that CATL's relative capital expenditure share will increase from a low point of about 13% in 2024 to about 24% in 2025, driving market share growth in the coming years. Goldman Sachs also believes that CATL has potential upside in the US market progress and potential reachable markets.