CATL (03750) reported its second-quarter results after the market closed last Friday (24th), with net profit reaching 22.6 billion yuan. This exceeded the company's guidance of 22 billion yuan but was slightly below the investment bank's forecast of 23 billion yuan, primarily due to an overestimation of interest income.

First-half revenue grew 54.8% year-on-year to 276.9 billion yuan, while net profit increased 42% year-on-year to 43.3 billion yuan. According to Morgan Stanley, the newly announced A-share share buyback plan, worth up to 40 billion yuan (or US$5.9 billion), is far more significant than the earnings themselves. The repurchased shares will be cancelled, signaling management's strong confidence in the company's intrinsic value. Morgan Stanley maintains its "Overweight" rating on CATL's Hong Kong-listed shares with a target price of HK$815.

The report noted that second-quarter sales volume grew 60% year-on-year, beating expectations, while profit margins remained stable. Per-unit gross profit was slightly soft due to quarterly product mix fluctuations, but it remained stable for the same products, with improvements seen in energy storage products. Management's optimistic guidance for next year's profit growth to significantly exceed 20% is expected to help shift market focus from short-term performance toward the increasingly clear sustainable growth trajectory by 2027.