Damo: Downgrade the Ningde Era (03750) rating to “keep pace with the market”, and the target price was lowered by 44.7% to HK$390

The Zhitong Finance App learned that Morgan Stanley released a research report stating that it downgraded the rating of Ningde Era (03750) H shares from “increasing holdings” to “in sync with the market”, and that the target price was drastically lowered by 44.7% from HK$705 to HK$390. The bank pointed out that the company's third-quarter revenue increased 59% year on year, reflecting strong performance in both shipment volume and market share, but fluctuations in the product portfolio exceeded expectations, leading to overestimation of profitability. The bank lowered its net profit forecast for this year by 6% to RMB 89.4 billion, and lowered its 2027 and 2028 forecasts by 7% and 10%, respectively.

The bank said that the net profit per unit for the third quarter of the Ningde Era decreased by about 29 yuan per kilowatt-hour on a quarterly basis, taking into account factors such as lithium inventory losses, exchange losses, reduced consumption tax and VAT rebates, customer rebates, and product portfolio changes. If one-time and reversible projects are added back, the net profit performance per unit for the third quarter is still resilient.

The bank is still optimistic about the company's long-term prospects. It believes that with the exception of the US market, global electrification can touch the market or double in the next five years, the sodium battery product cycle has begun to be implemented, and the power exchange alliance is progressing well. However, the bank expects that H shares may still fluctuate in the next three months in the Ningde era, and the premium of H shares compared to A shares may narrow further.

At the same time, the bank lowered the target price of Ningde Times A shares (300750.SZ) by 33% from RMB 500 to RMB 335, and removed A-shares from the list of preferred shares, but maintained the A-share “gain” rating.