CATL Soars 17% on IPO Debut, Unshaken by US-China Tensions

Global Investors Flock Despite US Sanctions
Stock Soars 17% on First Day of Hong Kong Listing
Hungary Factory Project Accelerates

CATL (Contemporary Amperex Technology Co. Limited), the world's largest battery manufacturer from China and considered the most anticipated global IPO of the year, made a spectacular debut on the Hong Kong Stock Exchange on May 20, marking a successful start.

The stock price of CATL, a major player in the global battery market newly listed on the Hong Kong stock exchange, is displayed on the screen. Photo by AP Yonhap News

On this day at the Hong Kong Stock Exchange, CATL shares traded at 296 Hong Kong dollars (approximately 52,700 won) in early trading, about 12.5% higher than the IPO price of 263 Hong Kong dollars (about 46,800 won). In the afternoon, the stock price rose to 307.6 Hong Kong dollars, about 17% higher than the IPO price. Compared to CATL's stock price on the Shenzhen Stock Exchange in mainland China, which was up 0.95% from the previous day at the same time, the Hong Kong listing attracted significantly stronger investor interest.

Through this listing, CATL raised 4.6 billion dollars (about 6.3517 trillion won), far exceeding its initial target of 4 billion dollars. This was made possible by successfully selling a total of 136 million shares at the top end of the desired price range, 263 Hong Kong dollars per share. If the overallotment option (greenshoe) is exercised, the total funds raised could increase to as much as 5.3 billion dollars (about 7.3797 trillion won), which could nearly double the total IPO proceeds on the Hong Kong Stock Exchange this year.

According to Dealogic, the scale of CATL's Hong Kong listing is the largest among all global IPOs this year. It significantly surpasses the previous largest, Japan's JX Advanced Metals (2.98 billion dollars), and is overwhelmingly larger than the biggest Korean IPO this year, LG CNS (820 million dollars).

This CATL IPO has drawn even more attention as it was achieved amid the headwinds of U.S.-China tensions and American regulatory challenges. Earlier this year, the U.S. Department of Defense designated CATL as a company supporting the Chinese military, and the U.S. Congress pressured major American investment banks such as JPMorgan and Bank of America to withdraw from participating in the CATL IPO. In response to these circumstances, CATL limited sales to U.S. investors and adopted the 'Reg S offering' method, which exempts it from certain U.S. regulatory reporting requirements.

Industry analysts say that despite such constraints, the strong success of CATL's IPO reflects investors' positive assessment of the company's market leadership in the transition to electric vehicles. CATL counts global automakers such as Tesla, Volkswagen, Ford, and Mercedes-Benz among its clients, and with a market share of about 38% in the global electric vehicle battery market, it maintains a significant lead over the second-ranked BYD.

Last year, even amid a slowdown in the electric vehicle market, CATL posted a net profit of 50.7 billion yuan (about 10.2 trillion won), demonstrating solid growth potential. Recently, the company unveiled a groundbreaking new battery capable of delivering a 520-kilometer range with just a five-minute charge and up to 1,500 kilometers on a full charge, further strengthening its market leadership.

In addition, CATL plans to invest 90% of the funds raised from this IPO in the construction of a factory in Hungary, aiming to accelerate its expansion into the European market.

Johnson Wan, an analyst at Jefferies, stated, "CATL's current price-to-earnings ratio (PER) is about 17 times," and projected, "There is potential for an additional 50% increase going forward."