Electric vehicle battery firm soars on trading debut

TOKYO • The Chinese founder of the world's biggest maker of electric vehicle batteries and his top lieutenant became billionaires yesterday after their company's shares soared during the first day of trading in Shenzhen.

Contemporary Amperex Technology (CATL) jumped by the maximum 44 per cent allowed by the exchange, valuing the company at about US$12.3 billion (S$16.4 billion).

That cemented the position of Mr Zeng Yuqun, CATL's founder and top shareholder, on China's rich list with an estimated net worth of about US$3.4 billion, according to the Bloomberg Billionaires Index.

Investors are confident that CATL can fend off rivals Panasonic Corp, which makes power packs with Tesla; Warren Buffett-backed BYD; and LG Chem as the increasing popularity of electric vehicles boosts demand for the batteries that move them.

CATL, whose customers include Volkswagen AG, previously cut the size of its initial public offering by more than half, compared with its original ambitions, because of declining margins and a cap imposed by the Chinese authorities on price-earnings ratios in IPOs.

The IPO made CATL the biggest company on China's Nasdaq-style ChiNext list. Mr Zeng, a 50-year-old engineer who started CATL seven years ago, owns a 26 per cent stake. Vice-chairman Huang Shilin holds 12 per cent and has an estimated net worth of US$1.7 billion.

Macquarie Bank in Hong Kong rated CATL "outperform" yesterday and set a price target of 90 yuan, more than double the current price of 36.2 yuan.

The government's generous subsidies for new-energy vehicles and restrictions on petrol cars in some cities will help battery demand quadruple in the next four years in China, Bloomberg New Energy Finance said in a report yesterday. CATL is best positioned to benefit because of its advantages in capacity and customer base, it added.

Mr Zeng was born in a mountain village an hour away from CATL's headquarters in Ningde city, Fujian province, and sometimes organises employee excursions to his birthplace. For most of his career, he worked on lithium-ion batteries for consumer electronics, including the iPhone, at a subsidiary of Japan's TDK that he helped set up.

His decision to found CATL in 2011 marked a gamble on Chinese policy. Just 1,014 alternative-energy vehicles were sold in China that year, according to Bloomberg Intelligence, but his prediction that the government's push for alternative-energy cars would boost demand for lithium-ion batteries proved correct. Part of the IPO proceeds will go to developing more-advanced battery technologies.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 12, 2018, with the headline 'Electric vehicle battery firm soars on trading debut'. Print Edition | Subscribe