The sudden slump in China’s biggest electric-vehicle battery maker this year has erased almost 40 per cent of founder Robin Zeng Yuqun’s personal wealth while hitting some of the world’s biggest fund managers. Zhang Kun has managed to sidestep the pain. Zhang, an industry celebrity at E Fund Management in southern Guangdong, has kept Contemporary Amperex Technology out from his four funds with US$12.7 billion of assets, while the stock crashed 37 per cent. The Shenzhen Component Index fell 26 per cent while the ChiNext gauge retreated 33 per cent in the same period. With car production under duress from Covid-19 measures in Shanghai and prices of lithium surging amid tight supply, analysts have started to dial back their bullish forecasts and price targets. Several global funds including Capital Group and Allianz have trimmed their positions. “We are cautious due to the Covid impact along the supply chain,” Johnson Wan, an analyst at Jefferies, said in a report on May 2 when he downgraded the stock to underperform. “2Q might be a lost quarter.” CATL, as the world’s biggest lithium-ion EV battery producer is known, fell 2 per cent to 368.50 yuan in Shenzhen on Monday. The 37 per cent slide this year has erased 512 billion yuan (US$76.1 billion) from its market capitalisation. It took the stock about seven months to grow the same value to its all-time high on December 2. Chairman Zeng, who founded the firm in 2011 and controls 24.5 per cent of its shares, saw his personal fortune recede to US$20.8 billion from US$32.4 billion. His ranking slipped to fifth from second among mainland and Hong Kong billionaires in Bloomberg’s rich list. Tesla’s battery supplier CATL loses trillion-yuan value marker as Shanghai lockdown compounds stock slump Based in Ningde in eastern Fujian province, CATL reported a 24 per cent drop in first-quarter earnings to 1.49 billion yuan, the first decline in two years. While the volume of installed EV batteries remains strong, the surge in raw material costs will chip away its profit margins, Jefferies said. The price of lithium carbonate has rocketed to 250,000 yuan per tonne from 30,000 yuan in 2021, according to JPMorgan Securities. It has since risen another 62 per cent to 427,000 yuan, according to Bloomberg data. Wan at Jefferies slashed his 12-month price target for CATL to 324 yuan from 553.52 yuan in his May 2 report. At least 13 other analysts have trimmed their price targets after the first-quarter earnings shock. The consensus, currently at 544.70 yuan, has been reduced by 30 per cent since the stock peaked in December. China’s CATL, Ganfeng lock in supplies of lithium as price of key battery metal touches record high “In the short to medium-term, CATL is flanked by challenges both upstream and downstream,” said Han Chen, an analyst at Southwest Securities in an April 30 report, who maintained a “hold” rating for the stock. “Apart from fluctuating lithium prices, it could also face weak downstream demand throughout the second quarter if coronavirus outbreaks persist, as that would dampen demand for electric vehicles and complicate work resumption.” Meanwhile, analysts including Rebecca Wen at JPMorgan have kept their overweight rating on CATL, despite trimming the company’s earnings forecasts and lowering its price target of 600 yuan by end June 2023 from 700 yuan, according to their post-earnings report on May 4. “Spot prices for lithium carbonate had started to decline since late March,” they said, adding that partial battery price hike will fatten margins again. “Is first-quarter 2022 the bottom? We believe so.” Several global fund managers have reduced their bets. The Los Angeles-based Capital Group sold 3.3 million shares, according to its filing on April 22, mainly in its US$164 billion EuroPacific Growth Fund. Funds managed by JPMorgan Chase offloaded 2.1 million shares based on a May 6 filing, according to Bloomberg data. Zhang Kun has not owned any of CATL shares in his portfolio for at least the three past quarters, according to Bloomberg data. While that shielded his funds from losses, he would have also missed the stock’s rally in 2021. Can Chinese EV battery makers CALB, Tianqi Lithium recharge Hong Kong’s appetite for IPOs? CATL is the biggest constituent in the ChiNext gauge with an 11.7 per cent weight, making it the chief contributor to the slump among China’s high-growth stocks. The firm will raise prices this quarter to shore up margins and profits, according to an investor call last week. Its production capacity can still meet demand this year, despite a small impact from a coronavirus outbreak in its home base, it added. “The impact of elevated raw material cost has now become a reality for everyone, and CATL’s vertical integration only guarantees them volumes but not prices in the current tight market,” Wan at Jefferies wrote. “The company will still suffer from cost pressure in the near term.”