JP Morgan downgrades Contemporary Amperex Technology (03750) to "Neutral" and raises its target price to 415 Hong Kong dollars.

JPMorgan Chase issued a research report stating that the profit forecast for Contemporary Amperex Technology (03750) was raised by 5% to reflect better-than-expected performance, and the H-share target price was raised from HK$400 to HK$415, equivalent to a forecasted 20 times the P/E ratio for 2026 and 2027. Considering that H-shares have risen by 62% since their listing, the valuation is now considered reasonable (H-shares equivalent to forecasted P/E ratios of 26.9 and 22 times for the next two years), hence the rating was downgraded from "overweight" to "neutral", emphasizing that this downgrade is purely based on valuation considerations. Meanwhile, Contemporary Amperex Technology's A-shares (300750.SZ) remain the bank's preferred choice in the Chinese battery industry, maintaining an "overweight" rating. The valuation of Contemporary Amperex Technology's A-shares is currently equivalent to forecasted P/E ratios of 19.1 and 15.7 times for the next two years. The report states that Contemporary Amperex Technology's second-quarter sales volume is approximately 150 GWh, with a net profit of around 16.5 billion RMB, both of which exceed the bank's expectations. However, the better-than-expected performance may have been within market expectations, as the company's H-shares and A-shares have increased by 24% and 10% respectively over the past 9 trading days, while the Hang Seng Index has increased by 4% during the same period. Currently, the premium of Ningde's H-shares over A-shares is over 40%.