CATL’s Hong Kong Listing: a US $4 Billion Charge into Europe

Contemporary Amperex Technology Ltd (CATL) is poised to raise up to HK $31 bn (≈US $4 bn) via a secondary listing of 118 million H-shares, priced at a ceiling of HK $263 each — barely a 1.4 % discount to its Shenzhen A-shares. Cornerstone subscribers range from Sinopec and the Kuwait Investment Authority to Hillhouse and Taikang, signalling broad regional appetite for exposure to the global leader in lithium-ion cells. Trading is slated to start on 20 May with ticker 3750 HK.

Follow-the-money: CATL will deploy c. 90 % of the proceeds to accelerate its 100 GWh green-field plant in Debrecen, Hungary — a €7.3 bn project that will anchor supply for Mercedes-Benz, BMW et al. and cement Hungary’s status as central Europe’s battery hub.

Operational pulse:

• FY-24 revenue slipped 9.7 % YoY to RMB 362 bn as lithium carbonate prices collapsed, yet net profit still rose 15 % to RMB 50.8 bn, helped by scale and better mix.

• Shipments hit 246 GWh, +47 % YoY, pushing CATL’s global market share to 37.9 % in 2024 and 38.3 % in Q1-25.

Valuation check: The A-shares value CATL at roughly RMB 1.1 tn (US $150 bn), or ~17× FY-25e earnings — a discount to LG Energy Solution (~20×) and a fraction of Tesla’s multiple despite CATL’s higher expected operating profit next year (US $10.6 bn vs Tesla’s US $6.6 bn). This looks undemanding for a business that, in my base case, can sustain a mid-teens CAGR without stretching the balance sheet.

What could short-circuit the bull case?

• Geo-politics: Inclusion on a US DoD watch-list is reputational, not prohibitive, but it raises headline risk and could cap US exposure.

• Margin compression: The FY-24 gross margin rebound (15 % in Q4) is encouraging, yet a renewed spike in lithium or energy costs would squeeze spreads.

• Capex burden: Management is targeting >670 GWh of capacity by 2025; disciplined ROI will be critical as Europe’s EV demand normalises.

MY TAKE

From my perspective, I see CATL’s deal less as pure fund-raising and more as strategic signalling: anchoring a euro-zone supply chain just as Brussels finalises its Critical Raw Materials Act. The near-par pricing to A-shares suggests demand is already deep; any greenshoe exercise could nudge the raise beyond US $5 bn, eclipsing JX Advanced Metals’ Tokyo debut.

In portfolio terms, I view CATL as a “core compounder” for the green-transition theme: dominant share, long-run learning-curve advantages, and optionality in sodium-ion and solid-state chemistries. I’ll be looking to accumulate on any softness post-listing, with a near-term fair value of RMB 300 (≈HK $334) based on 20× FY-25e EPS — still modest for a company powering more than one in three EVs worldwide.