Morgan Stanley released a research report expecting that the energy storage industry in China will shift from low-quality to high-quality development over the next 5 years.

Compared to smaller battery manufacturers, CATL's products are anticipated to generate a premium of 7-15 ppts in investment return for energy storage projects.

The broker raised its EBITDA forecast for CATL, and elevated its target price for CATL's A-shares (300750.SZ) from RMB425 to RMB490, with rating reiterated at Overweight.

Morgan Stanley also elevated its target price for CATL's H-shares from $465 to $585, and downgraded rating from Overweight to Equalweight, with top pick target shifted from H-shares to A-shares.

Shares of CATL slid over 6% in Hong Kong.