The newly Hong Kong-listed CALB aims to become one of the top three players in the electric vehicle battery industry within five years, said CEO Jingyu Liu.
Shares of the Changzhou, Jiangsu-based company closed at HK$38 (US$4.84), matching the IPO price, after falling as low as HK$37.15. The offering raised around HK$10.1 billion (US$1.3 billion), with shares selling at the low end of a marketed range that reached as high as US$51.
“We aim to be the top 5 in the global EV battery market in a year and be third within three to five years,” Liu said in an interview with Bloomberg Television.
The company is currently building production lines with a total annual capacity of more than 200 GWh. “This increased battery capacity will make us one of the top few in the world,” said Liu, the only female CEO of one of the world’s top 10 battery makers.
China Aviation Lithium Battery Technology, as it is officially known, was founded in 2015 under Luoyang, a wholly-owned entity of China Airborne Missile Academy, part of the state-owned aerospace and defense enterprise Aviation Industry Corp. of China is.
The lofty goals for the Xpeng supplier come with the need to pay for expansion. Liu said the IPO is a “natural next step” in the high-growth sector.
“Our IPO funds will be used for business expansion and research and development,” Liu said. “But our finances are stable and we have sufficient capital for current needs.”
CALB forecasts a “large” increase in battery market share domestically as it increases output, followed by “significant growth” in overseas markets from 2024, she said.
The company ranks seventh among global EV battery suppliers, according to SNE Research, but is eclipsed by larger Chinese competitor Contemporary Amperex Technology, followed by South Korea’s LG Energy Solution and BYD, all of which have deep pockets and equally high ones have ambitions to expand their market share.
Market leader CATL has already announced spending commitments worth around US$20 billion this year for a series of factories to be built domestically and as far away as Hungary and resource-rich Indonesia.
As the EV supply chain struggles with rising costs for key battery materials like lithium and copper, CALB has weathered the worst industry-wide price shock, Liu said. Margins continued to grow, with first-quarter earnings higher than a year earlier and second-quarter earnings higher than the first, she said.
“We anticipate that our earnings will continue to grow in each subsequent quarter,” she said. “We will reduce supply chain costs through collaboration with our upstream suppliers and battery recycling.”
Also smaller in size than originally expected, CALB is Hong Kong’s third-biggest IPO this year as medium-to-large deals return after a weak first half. Still, funds raised in the city are down about 75% since early January as rising interest rates roil markets and keep issuers on the sidelines.
Half of the 18 companies listed in Hong Kong after bids of more than $100 million this year ended their first session underwater. Five finished little changed and only four advanced on day one.
CALB’s debut comes a week after a disastrous first day of trading for Chinese electric vehicle maker Zhejiang Leapmotor Technology, which fell 34% after raising $800 million in an IPO priced at the bottom of the market’s range. The drop was the largest first-day drop for a listing of this size or larger recorded in Hong Kong.
Huatai International is the sole sponsor of CALB’s Hong Kong IPO.
Photo credit: Bloomberg
Photo credit: Bloomberg
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