The way is correct, but can be improved a bit with the extended set-syntax.
set "var=xyz"
Sets the var to the content until the last quotation mark, this ensures that no "hidden" spaces are appended.
Your code would look like
set "var1=A"
set "var2=B"
set "AB=hi"
set "newvar=%var1%%var2%"
echo %newvar% is the concat of var1 and var2
echo !%newvar%! is the indirect content of newvar