CATL achieved a near two-year high gross profit margin

Published: Apr 16, 2024 22:39
Against the backdrop of declining revenue, Contemporary Amperex Technology Co. Limited (CATL) continues to maintain an upward trend in net profits, remaining at a scale of over 10 billion yuan, thanks to the improvement in the company's gross profit margin. According to Choice data, the company's sales gross profit margin of 26.42% is the highest in nearly two years. This Q1 performance report has been considered by the industry to exceed expectations, possibly leading to Moody's Investors Service upgrading CATL's issuer rating from Baa1 to A3 today.

According to the financial report, CATL achieved operating income of 79.771 billion yuan in the first quarter of 2024, a year-on-year decrease of 10.41%; and net profit attributable to shareholders of the parent company was 10.5 billion yuan, a year-on-year increase of 7%. Previously, industry insiders had expected CATL's net profit for the first quarter to be between 9.5 billion and 10 billion yuan, with global battery shipments around 85-90GWh. Tonight, CATL's performance in the first quarter was considered to exceed expectations by the industry.

In fact, today, Moody's Ratings upgraded CATL's rating to A3. In the rating report, Chenyi Lu, Vice President and Senior Credit Officer of Moody's Ratings, stated: "Even though price competition has limited revenue growth, this rating upgrade reflects our expectation that CATL's credit condition will remain stable with stable profitability, low leverage, and continuously increasing net cash position."

CATL's main business is mainly divided into three major segments: power battery business, energy storage business, and battery materials and recycling and battery mineral resources. The first two businesses are CATL's main sources of revenue.

Currently, the main business of the company, the price of power batteries continues to decline. The market is concerned that the decline in battery prices will affect performance. However, according to reporters from Financial Alliance, they learned from industry insiders at the quarterly performance exchange meeting held tonight that the company is more concerned about the stability of operating performance and will not settle at that price on the day of price adjustment. The company will agree on a provisional price with the car companies and settle according to the provisional price during the negotiation period, while making reasonable estimates. "We" believe that in the case of a high probability of price adjustment, we will estimate according to the principle of stability, and the fluctuation of profits due to price fluctuations throughout the year will not be so obvious.

In terms of production and sales volume, industry demand continues to grow. The sales volume of the battery industry in the first quarter showed a year-on-year upward trend overall. According to data from the China Automotive Power Battery Industry Innovation Alliance, from January to March, China's cumulative sales of power and other batteries totaled 167.7GWh, a cumulative year-on-year increase of 35.5%.

In terms of market share, CATL's shipment share has further increased compared to last year. According to SNE Research data, CATL's global power battery usage market share was 36.8% last year, and this year's market share in January-February has increased to 38.4%.

Regarding the shipping structure in the first quarter, CATL executives stated at the performance exchange meeting that the overall battery shipment volume was 95GWh, a year-on-year increase of 25%, with energy storage accounting for 20% and other businesses accounting for 4%. This means that the proportion of lithium batteries still exceeds 70%, compared to the disclosure in the 2023 annual report, the proportion of energy storage business has increased by 6%.

Financial Alliance reporters previously learned from industry insiders that the Q1 energy storage order situation this year exceeded expectations. In the past, Q1 was the off-season for the industry, and another battery company said that Q1 energy cell was close to full production.

In terms of technological innovation, CATL revealed that its Sword Battery has begun mass delivery. From the investor communication meeting on March 15th, CATL has stated that the Sword Battery can achieve a range of 400 kilometers after supercharging for 10 minutes, and many customers and dozens of models plan to mass produce it.

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