(Yicai) March 11 -- Shares of battery giant Contemporary Amperex Technology, one of China’s most valuable companies, closed up 14.5 percent after Morgan Stanley upgraded its rating and stock price target for the firm.

CATL’s shares [SHE: 300750] ended at CNY180.85 (USD25.20) apiece in Shenzhen today, extending the stock’s gain to over 10 percent since the start of this year.

Morgan Stanley raised its share price target for the world's biggest battery supplier to CNY210 (USD29.20) and upgraded its rating on the stock to ‘overweight’ from ‘equal weight,’ describing it as its “top pick,” the US investment bank wrote in a research note published yesterday.

As the price war draws to a close, Ningde-based CATL is poised to improve cost efficiency via a new generation of mega-large production lines and sharpen its edge in terms of return on equity, the bank said.

Nine months ago Morgan Stanley had downgraded CATL’s rating to ‘underweight,’ citing increased performance risks linked to market share and profitability. 

Headwinds from the United States Inflation Reduction Act seem to be priced in, Morgan Stanley said in the latest report. "We expect the company to restore EBIT growth year-on-year in the next few quarters after a slowdown in 1Q24." EBIT refers to profit before interest and taxes.

Last year, CATL shipped 259.7 gigawatt hours of batteries, up 41 percent from 2022, ranking first worldwide for the seventh year in a row with a market share of nearly 37 percent, according to data from South Korean market researcher SNE Research. 

CATL expects to report a 38 percent to 48 percent jump in net profit to between CNY42.5 million and CNY45.5 million (USD5.9 million and USD6.3 million) for last year, according to its performance update in January.

Editor: Emmi Laine