Contemporary Amperex Technology Co. Ltd. (03750) Report Interpretation

Overview

This update examines how China's expanding anti-involution campaign may reshape battery-sector competition. Morgan Stanley expects utilization-based capacity approvals to favor CATL, reinforce industry consolidation, and improve the competitive environment across EV batteries and energy storage.

Core views

Morgan Stanley says China's battery anti-involution campaign has entered a new phase. According to Caixin on September 10, regulators have temporarily suspended approvals for new domestic EV-battery and energy-storage battery projects while conducting a comprehensive industry review expected at year-end. The report interprets this as a move beyond price discipline toward capacity discipline: future expansion approvals would increasingly be linked to actual utilization rates. The proposed approach would differentiate strongly between leaders and lower-utilization producers. Companies with relatively high utilization are more likely to receive approval for future battery expansion projects, while lower-utilization players may face tighter limits on new capacity. CATL is presented as a principal beneficiary because its capacity utilization reached 95% in 1H26, materially above the 65% China industry average. If implemented consistently, Morgan Stanley believes the policy could accelerate industry consolidation, raise utilization rates, and create a more rational competitive environment in both EV batteries and energy storage. The mechanism is that restricting incremental capacity at underutilized producers could curb overcapacity while allowing efficient leaders to retain expansion options. For CATL's A shares, Morgan Stanley retains an Overweight rating, a RMB595.00 target price, and a stated 76% upside from the RMB338.06 closing price on September 10, 2026. Its base-case valuation applies a 15x EV/EBITDA multiple to 2027E EBITDA, implying a 22x 2027E P/E. The report considers this multiple consistent with CATL's five-year average and global battery peers, while noting that the target value represents a 30% discount to its DCF-based NAV. For CATL's H shares, the report uses a 17.5x EV/EBITDA multiple on 2027E EBITDA, implying a 25.4x 2027E P/E, and applies a 20% H/A premium. The report states that the A-share target multiple remains 15x, in line with both its five-year average and global peers.

Analysis framework

Morgan Stanley starts with the reported regulatory suspension of new battery-project approvals, interprets the policy shift as utilization-linked capacity discipline, and compares CATL's utilization with the industry average to assess likely competitive effects. It then values the shares using forward 2027E EV/EBITDA multiples cross-checked against historical levels, global peers, and DCF-based NAV.

Methodology notes

• Industry AnalysisSupply-demand framework

  Utilization-linked capacity discipline

  The report assesses how restricting new capacity additions at lower-utilization producers could reduce overcapacity, improve sector utilization, and favor efficient market leaders.

• Valuation methodsEV/EBITDA valuation

  Forward EV/EBITDA multiple valuation

  Morgan Stanley values CATL using 2027E EBITDA multiples, comparing the selected multiples with the company's five-year average and global battery peers.

• Valuation methodsDCF (Discounted Cash Flow)

  DCF-based NAV cross-check

  The report compares its target value with DCF-based net asset value, stating that the A-share target embeds a 30% discount to that estimate.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Contemporary Amperex Technology Co. Ltd. (300750.SZ)

  Primary covered company expected to benefit from utilization-linked capacity discipline.

  Strengths

  95% capacity utilization in 1H26 versus a 65% China industry average.

  Comparison

  Its utilization rate is 30 percentage points above the reported industry average.

  Risks

  Weaker EV penetration and energy-storage application, competition from other battery makers, geopolitical supply-chain decoupling, and stalled market-share gains.

• Contemporary Amperex Technology Co. Ltd. (3750.HK)

  CATL's Hong Kong-listed shares are valued using a separate forward EV/EBITDA multiple.

  Strengths

  The report applies a 20% H/A premium in its valuation framework.

  Comparison

  Valued at 17.5x 2027E EV/EBITDA versus the A-share 15x target multiple.

  Risks

  Weaker EV penetration and energy-storage application.

Key data

• CATL capacity utilization95%1H26 utilization rate
• China battery-industry average utilization65%Compared with CATL's 95% utilization in 1H26
• A-share target priceRMB595.00Morgan Stanley target price
• A-share closing priceRMB338.06As of Sep 10, 2026
• Implied upside76%Upside to the A-share target price
• A-share valuation15x 2027E EV/EBITDAImplies 22x 2027E P/E
• H-share valuation17.5x 2027E EV/EBITDAImplies 25.4x 2027E P/E and includes a 20% H/A premium

Impact & implications

Morgan Stanley believes consistent enforcement of utilization-linked project approvals could favor battery leaders such as CATL, constrain lower-utilization competitors, and support improved capacity utilization and more rational competition across EV-battery and energy-storage markets.

Risks

• EV penetration and energy-storage application may be weaker than expected.
• Other battery makers could pose greater competitive threats.
• Geopolitical risks could lead to battery supply-chain decoupling.
• CATL's market-share gains could stall.

What to watch

• The year-end comprehensive industry review and whether utilization rates formally determine future battery-project approvals.
• CATL's capacity utilization relative to the industry average.
• EV penetration and energy-storage demand trends.
• CATL's margins and market-share trajectory.