Tesla’s battery supplier CATL loses trillion-yuan value marker as Shanghai lockdown compounds stock slump
- Stock slumped 7.6 per cent in Shenzhen, bringing this year’s pullback to 31 per cent, or US$63 billion, amid lockdown-related production hiccups
- CATL is the world’s biggest maker of lithium-ion batteries for electric vehicles, and counts Tesla and Xpeng among its customers
A three-month slide in Contemporary Amperex Technology Ltd, a major Tesla supplier, has knocked its market value below 1 trillion yuan (US$156.3 billion) for the first time in about a year. Part of that is because of Covid-19 production hiccups.
The setback mirrors the fallout in China’s stock market, with the Shanghai Composite Index ranking as the worst performer among major Asia-Pacific equity benchmarks. Policymakers in Beijing have disappointed investors this month by withholding their stimulus firepower.
“Shipments would be a major issue for CATL now because of supply-chain disruptions nationwide,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “Investors keep asking whether its profit margins will be eroded, with higher material costs and difficulty in shipments.”
The decline has soured investor sentiment around so-called clean-energy stocks, from EV battery makers to carmakers and renewable-energy producers, which enjoyed a meteoric boom before and after China pledged its 2030 peak-emissions and 2060 net-zero target.
The stock pullback this year has also become the biggest drag on the ChiNext index of growth companies on the Shenzhen exchange. Within the CSI 300 Index, nine of the 10 industry groups have been losers this year, the exception being energy producers.
Higher bond yields, stroked by global inflation and the Federal Reserve tightening, are also fanning the sell-off in super-expensive stocks in favour of safer traditional bets.
Even after this year’s US$63 billion rout, the EV battery maker still trades at 96 times earnings, or six times the market average, according to Bloomberg data. At its peak, the multiple reached 170 times, propelling its market capitalisation to behind only liquor king Kweichow Mao-tai.
“The best way is to avoid such richly-valued stocks” Dai Ming at Huichen added.
CATL is due to release its first-quarter results next week. Net income probably jumped between 151 per cent and 196 per cent from a year earlier, the company said in an exchange filing in January.