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宁德时代:The rising Chinese lithium power

评论: 0 | 发布者: SSGL-09

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In pole position to power China’s EV’s; initiating with Buy

With 30% market share, demonstrable price leadership, and a clear costadvantage, we believe CATL is the best positioned battery maker supplying theEV sector in China. It is also first to make inroads into supplying global OEM’s.As such, we believe it can achieve volume growth of close to 50% annually to2020 with profits rising at a 30% CAGR. Our valuation reflects that high growtHPhase with a target multiple of 36x and 81% upside potential for the stock. Weinitiate with a BUY rating.

The Chinese EV lithium battery market leader

CATL's sales volume exhibited exponential growth at a 3-year 263% CAGRto 2017, thanks to its strong execution and solid manufacturing experience.The company has secured the lead position in the main future growth driver(passenger EVs), which we expect will support its capacity from 17.1GWh in 2017to 54.0GWh in 2020E at a CAGR of 47%. CATL also shows up on the procurementroadmaps of key international auto OEMs, which makes it the first Chinese EVbattery maker with a meaningful overseas presence.

Pricing premium and competitive cost position

Reflecting the company's superior product quality, our due diligence shows thatCATL achieved an 8% battery pack pricing premium over the Chinese industryaverage in 2017. Its scale and progress in manufacturing technology also gavethe company a 7-10% cost advantage in raw material procurement. Although unitgross profit will likely fall from RMB0.58/wh in 2017 to RMB0.36/wh in 2020E inorder to lower the cost of EV ownership, its strong volume growth should drivethe bottom line higher in the next 3 years.

Initiating coverage with Buy; target price set at 36x 2019E P/E; risks

Our target price of RMB72.2 is based on 36x 2019E EPS and implies 81% upsidepotential. We believe our multiple is justified by its strong recurring incomegrowth at a 3-year CAGR of 30% and its leading industry position. Key risks:unexpected changes in EV demand and government's subsidy policy.


(编辑:SSGL-09

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