Strategic business initiatives that benefit long-term growth are still gradually unfolding.
Ningde era (300750. SZ) continued its "over-expectation pattern" in October.
The company released the third quarter of 2021 financial report on the evening of October 27, the first three quarters, the company achieved revenue of 73.362 billion yuan, an increase of 132.73% year-on-year; net profit attributable to the mother of 7.751 billion yuan, an increase of 130.9% year-on-year; deduction of non-attributable net profit of 6.604 billion yuan, an increase of 157.21% year-on-year.
Among them, the gross profit margin of CATL in the third quarter reached 27.9%, up 0.66% from the previous quarter. Given the high prices of resources and materials, the market was previously optimistic about the company's performance continuing to grow, but it was naturally worried that its profit margins would be suppressed. Bucking the trend and solid gross margin figures will undoubtedly help to appease short-term earnings concerns.
The Chinese edition of Barron's Magazine believes that the content of the three quarterly reports and its many recent business progress show that the comprehensive profitability of the Ningde era still shows a gradual marginal improvement, which in turn continues to accumulate new intrinsic value for the company.
<h1 id= "0v028" >1, the industrial chain leader's ability to withstand pressure</h1> financial reports at the same time show that by September 30, 2021, the company's inventory amount reached about 35 billion yuan, compared with the end of the second quarter, that is, up to 24.2 billion yuan of inventory increased by about 10.8 billion yuan, compared with about 13.2 billion yuan at the end of 2020, an increase of 164.37%. Abundant inventory not only reflects the rise in the absolute scale of the business, but also shows the forward-looking level of the operator's operation, which is expected to provide more space for the Ningde era to digest the pressure of the product price dimension.
It is also worth noting that the company recorded an asset impairment loss of 660 million yuan in the third quarter, taking this factor into account, the profit performance of CATL in this quarter may be better than the statement figures themselves. According to the financial report, the reason for this change was mainly "an increase in the provision for the decline in the price of inventories". This, in turn, is contrary to the expectation of battery price increases that are common in the market. Then there is reason to think that the "conservative" accounting treatment reflects the company's sober consciousness and calm mentality at the financial level.
On the other hand, by the end of the third quarter, the company's bills and accounts payable totaled 78.2 billion yuan, contract liabilities of 13.2 billion yuan, and accounts receivable and bills were 20.2 billion yuan. The research reports of CITIC Securities and Soochow Securities believe that this reflects the strong bargaining power of the Catalonia era and maintains a very high pricing power in the industrial chain.
<h1 id="a0eqr" >2, structural long-term growth expectations</h1> In addition to the financial report data, investors need to understand some trending operating facts.
On October 27, the company announced another news as early as the third quarter: CATL signed a technology licensing and cooperation intention agreement with Hyundai Mobis on the same day. According to the agreement, CATL will authorize Hyundai Mobis to use CTP (High Efficiency Grouping) technology and support its supply of CTP-related battery products in South Korea and even globally. CTP is a technology that integrates cells into battery packs without modules. The cooperation has two symbolic significances: first, this is a "technology out to sea", which is the first time that CTP technology has been authorized to use externally; second, the partners are from South Korea, the home of the main competitor LG Chem.
According to the financial report, from January to September 2021, the R&D expenditure of CATL was 4.594 billion yuan, an increase of 116.73% year-on-year, and the proportion of R&D expenses remained at a high level of about 6%-7% in the industry. The research report of Soochow Securities believes that the R&D investment of the Ningde era is ahead of LG Chem, forming a technological generation difference advantage, and the reserves of new technologies such as sodium-ion batteries are sufficient.
On October 28, the foundation stone of the new lithium battery production and manufacturing base project cooperated by CATL and Yichun City was laid. According to reports, according to the cooperation agreement, the total investment amount of the project is about 13.5 billion yuan, which is intended to further improve the company's production capacity layout.
On October 12, the company announced that it intends to invest no more than 32 billion yuan in Yichang City, Hubei Province, with the cathode material of new energy vehicle power batteries as the core, and build a production base that integrates full-cycle and multi-link businesses such as "phosphate rock - raw materials - precursor - cathode materials - battery recycling". The research report of Southwest Securities believes that this move will further reduce the cost of batteries through integrated layout, especially waste material recycling business.
In terms of energy storage business, CATL signed agreements with national energy groups, Chinalco, China National Gorges Group, China Huadian and other partners on October 20, 21 and 22 respectively, involving wind power, energy storage low-carbon factories, new power systems, integrated smart energy and other fields.
In September, CATL focused on the layout of lithium resources, acquiring the Canadian lithium mining company Millennial, strategically investing in Jiangxi Zhicun Lithium Industry, and indirectly holding the African Manono project, of which Millennial has about 4.12 million tons of lithium carbonate equivalent. The research report of Soochow Securities believes that the in-depth layout of the industrial chain will help the company ensure the supply of key resources.
Another development that should not be overlooked is its 2021 Stock Option and Restricted Stock Incentive Plan (Draft) released on October 26. A total of 4483 incentive recipients were granted for the first time in the plan, including middle management and core backbone employees; among them, the exercise price of the first grant of stock options was 612.08 yuan per share, and the grant price of the first grant of restricted shares was 306.04 yuan per share. The research report of CITIC Securities believes that the new equity incentive plan will help attract and retain outstanding talents and ensure the realization of the company's long-term development strategy and business objectives.
From the above information, it can be seen that the strategic business operations beneficial to long-term growth in the Ningde era are still gradually unfolding.
<h1 id="luw0r" >3, the target price once again started two weeks</h1> earlier than the financial report, October 13 to date, up more than 20%; on October 26, its stock price reached a new high of 638.48 yuan. By the close of trading on October 28, its stock price was 607.2 yuan, and the company's total market value reached 1,414.2 billion yuan.
CICC issued a research report raising the target price of CATL to 800 yuan, maintaining the "outperform industry" rating.
Prior to this, Guotai Junan gave CATL an "overweight" rating of 709 yuan on October 18; Soochow Securities gave a "buy" rating of 733 yuan on September 14; China Merchants Securities gave a "highly recommended" rating at the end of August, with a target price of 740 yuan.
As of October 28, the wind leading forecast (30 days) of catheter times has a consistent target price of 672.63 yuan, which is about 10% higher than the current stock price; if you refer to the target price given by CICC, China Merchants Securities and Soochow Securities, there is still about 20%-30% upside compared with the current stock price.
According to Wind data, as of the end of the third quarter, CATL became the second largest fund heavy stock after Guizhou Moutai; a total of 1489 funds held a total of 268.6262 million shares, with a stock market value of 141.225 billion yuan.
According to Wind data, among the top ten shareholders in the Ningde era, the number of shares held by Hillhouse Capital decreased by 2,198,776 shares in the third quarter, which is the second consecutive quarter of its reduction. After the reduction, Hillhouse Capital's shareholding decreased from 1.92% to 1.83%, still ranking as the company's eighth largest shareholder. As mentioned earlier, since entering the fourth quarter, the highest share price increase of CATL has exceeded 20%.
Undoubtedly, short-term investors should fully consider the stock price fluctuations caused by the market take profit operation. The risk factors suggested in the research reports of various institutions also include: the risk of downstream demand decline or production stagnation, the risk of new product and technology iteration related to research and development, the risk of intensified market competition, the sharp rise in raw material prices, and the risk of policy changes.
The Chinese edition of Barron's magazine reiterates the basic point of the magazine's report in early August: (1) The CATL era demonstrated the ability to exceed expectations on top of the higher established expectations of the outside world. (2) The market value growth of energy storage is still in its early stages; (3) for investors who are optimistic about the long-term value of the company, frequent buying and selling is likely to only increase the difficulty.
Text | Su Hao, Chinese edition contributor to Barron's Weekly
Edit | Kang Juan
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