TMTPost -- Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest battery manufacturer for electric vehicle (EV), posted record high top line and stronger-than-expected bottom line last year despite EV demand cooling.

Credit：CATL

For the year 2023, CATL recorded revenue of RMB400.92 billion, for the first time topping RMB400 billion in a year, and  net income rose 43.58% year-over-year (YoY) to RMB44.12 billion, according to an annual financial report released on Friday. The revenue fell short of the Wall Street estimates of RMB411.1 billion, and showed growth significantly came down compared with a 152.1% YoY surge in 2022. The annual net income also slowed down as 2022 saw a 92.9% YoY increase. But the profit still defied the analyst expected RMB43.7 billion, roughly in line with the company’s forecast range RMB42.5 billion and RMB45.5 billion. For the fourth quarter of the 2023, both of CATL’s top and bottom line was the highest in the year, though delivering decrease on a yearly basis. Revenue that quarter shed 10.1% YoY to RMB106.24 billion and net income dropped around by 1.4% to RMB12.96 billion.

Accoding to the report, CATL’s lithium-ion battery capacity sold 390 Gigawatt hours (GWh) last year, representing a 34.95% YoY rise. Out of them, sales volume of EV batteries grew 32.56% YoY to 321 GWh, and energy storage system sold 69 GWh with an increase of 46.81%. The installation of CATL EV batteries, empowering vehicles made by Chinese automakers like Li Auto, Huawei-backed AITO, Zeekr, an EV brand owned by Geely, increased 28.7% YoY to 171.9GWh with a 44.5% of market share in China, ranking the first for the seventh straight year. CATL attributed its overseas expansion to orders from projects of established automakers such as BMW, Daimler and Stellantis. CATL signed a non-binding Memorandum of Understanding (MoU)  with Stellantis, the second largest European automobile manufacturer by sales. The MoU marks CATL’s suppy of lithium iron phosphate (LFP) batteries for Stellantis’ EV production production in Europe. The two parties are considering the possibility to form a joint venture with equivalent contributions.

As of the year 2023, CATL has ranked first in the world for seven consecutive years, according to SNE Research, a South Korean battery and energy research company. According to the company’s report last month, CATL’s EV battery consumption volume reached 259.7GWh in 2023, with an increase of 40.8% compared to 2022 and a market share as high as 36.8%, nearly 21% ahead of the second. SNE estimated CATL’s EV battery installation took 27.5% of overseas market share in 2023, increasing 4.7 points from the previous year. In terms of energy storage battery, CATL stayed on top by delivery for three years in a row, with a share of 40% in 2023.  

Earler this week, CATL shares rallied by about 14.5% following Morgan Stanley upgrade. Analysts of the Wall Street firm raised their rating on CATL to overweight from equal weight, and hiked their target price by 14% to RMB210 in a note last Sunday. The latest target price suggested these analysts predicted CATL shares would  jump 32.9% from their close on March 8 in the coming year.

 Morgan Stanley analysts, led by Jack Lu, believed CATL shares has priced in the U.S. Inflation Reduction Act and are set to benefit from better efficiency and an end to price competition. The increase in efficiency is said to come from  a new generation of large-scale production lines, which is expected to widen its advantage in terms of return on net assets. Analysts expected CATL to restore earnings before interest and taxes (EBIT) growth year-on-year in the next few quarters after a slowdown in the first quarter of 2024. “With cost efficiency gains and a slowing capex cycle, we see the company as a value stock and cash machine, generating a free cash flow yield from 6% in 2024 to 10% in 2026,” the analysts said in the note.