The company has been at the top of the global power battery rankings for seven consecutive years. The company is the world's leading manufacturer of lithium batteries. Its main products include power batteries, energy storage batteries, lithium battery materials, etc. The company was founded in 2011, and its predecessor was the power battery division of ATL, a leading global consumer battery company. In 2017, the company reached the top of the global power battery shipment ranking, and since then it has been at the top of the list. In 2023, the company's global power battery market share reached 36.8%. Since 2021, the company has continuously ranked first in the global energy storage battery rankings, with a market share of 40% in 2023.
Demand for power and energy storage batteries is growing steadily, leading the strong company Hengqiang. In the NEV market, demand for power batteries continues to increase under the trend of electrification. We expect global power battery demand to be 1002 GWh in 2024 and 1,476 GWh in 2027. In terms of the energy storage market, a subsequent or steady decline in global financing costs is expected to release demand for energy storage. We expect global demand for energy storage batteries to be 231 GWh in 2024 and 381 GWh in 2027. The lithium battery industry is a typical technology-intensive, capital-intensive, and talent-intensive industry. In the context of sufficient production capacity supply, the company relies on advantages such as technology, scale, and channels to deeply bind core customers, and its market share is expected to rise steadily.
The company leads the world in R&D and manufacturing capabilities, and the global layout consolidates competitive advantage. The company attaches importance to scientific and technological innovation, is significantly ahead of peers in R&D investment and team size. The products have outstanding performance and comprehensive layout. In terms of manufacturing, the company develops and produces its own core equipment, reducing equipment investment and improving production efficiency and quality through technology such as super cable. The company has more than 100 GWH bases in Germany, Hungary and other places, and actively cooperates with European and American customers through technical licensing models. Currently, the company is significantly ahead of domestic peers in terms of the speed of global deployment and promotion of low-carbon projects.
The company's global power battery share is expected to rise steadily, and scenarios such as energy storage will help long-term development. In the domestic market, the company relies on Shenxing Battery and the like to continue to gain market recognition from OEMs and strengthens consumer brand awareness through CATL Inside; in overseas markets, the company relies on overseas bases and high-quality products that are expected to gain more share in the new round of European car companies' targeting. Against the backdrop of declining global financing costs, the delivery volume of energy storage systems to the company's key customers continues to increase, and the company's battery sales are expected to grow rapidly. In terms of profitability, the company's overseas customers are developing smoothly and are expected to increase profitability; the company's depreciation policy is strict, investment per unit production capacity is low, and the unit manufacturing cost is expected to decrease significantly after entering a steady phase of production expansion. Furthermore, the company's accounting treatment is careful, and the impairment of guarantees and accounts receivable is sufficient, but the actual amount incurred is small, and it may be possible to recover profit in the future.
Profit forecasting and valuation: The company leads the world in R&D and manufacturing capabilities, and has a stable position as the global battery leader.
We expect the company's net profit to be 49.77/57.09/65.1 billion yuan in 2024-2026, +13%/+15%/+14% year over year, EPS of 11.31/12.98/14.80 yuan, and dynamic PE 17/15/13 times.
Combining various valuation methods, we expect the company's reasonable stock price to be between 226.2-238.0 yuan. Compared with the company's current stock price, there is room for a 20%-26% premium, maintaining a “superior to the market” rating.
Risk warning: NEV sales fall short of expectations; risk of increased competition in the industry; risk of large fluctuations in raw material prices; risk of trade protectionism and trade friction; progress in overseas production capacity construction falls short of expectations.