CATL's stock price plunged 12% due to poor performance... Growing concerns in the Chinese battery industry (comprehensive)

(Shanghai = Yonhap News) Correspondent Cha Byeong-seop = With the third quarter performance of CATL (Ningthesdai), the world's No. 1 electric vehicle battery company, falling short of expectations, its stock price plummeted by more than 10% on the 21st (local time), and the stock prices of other Chinese battery companies also showed weakness.

According to Chinese portal Baidu, etc., CATL's stock price closed at 227.9 yuan on the Shenzhen stock market on this day, down 12.03% from the previous trading session.

This is half (-50.4%) of the high point (460.0 yuan) on May 6 based on the closing price.

CATL's stock price also fell 11.41% on the same day in the Hong Kong stock market, where it was listed simultaneously.

CATL announced its third quarter earnings the previous day amid intensifying competition in the electric vehicle battery market, recording net profit of 21.25 billion yuan (approximately 4.2 trillion won), a 14.54% increase compared to the same period last year.

This figure is far below not only the second quarter net profit growth rate (36.5%) but also the market forecast of 41.2% compiled by market research firm London Stock Exchange Group (LSEG). It is also the lowest since the fourth quarter of 2024 (13.6%).

Third quarter sales increased by 58.58% year-on-year to 165.22 billion yuan (approximately 32.8 trillion won), and although the growth rate was higher than the second quarter (56.9%), it fell short of the LSEG aggregate market forecast of 60.2%.

The South China Morning Post (SCMP) reported that CATL stock price was weak after Chinese electric vehicle manufacturers Xiaomi and Liotto announced last month that they were collaborating with other battery manufacturers.

There is also an observation in the market that automobile manufacturers are recently showing a trend of ‘escape from CATL’.

Investment bank JP Morgan downgraded its investment opinion on CATL Hong Kong stocks to 'neutral', saying that the profitability of China's electric vehicle industry has deteriorated faster than expected due to recent tax changes, which may affect demand for CATL battery products.

Citigroup and Morgan Stanley warned of the possibility that the market consensus forecast would be lowered.

According to Chinese media outlets such as the Securities Times, CATL responded to concerns about demand on this day by saying, "Demand (for electric vehicle batteries and energy storage devices) is not that pessimistic," and "the industrial capacity utilization rate is still relatively high."

Regarding next year's battery demand, he said, "It's still something to look forward to."

Regarding the 23.6% decrease in operating cash flow in the first to third quarters compared to the same period last year, CATL said it was due to proactive adjustments to payments to suppliers and did not affect the company's long-term cash earning ability.

However, the market believes that the Chinese authorities' resumption of battery consumption tax collection to prevent oversupply and the reduction of the value-added tax refund rate for new energy vehicle exports will act as a burden on the performance of the Chinese battery industry, including CATL.

Bloomberg News assessed that CATL's poor performance is raising concerns about Chinese battery companies.

Citigroup analysts said that CATL's performance has negative implications for other companies, saying, "If CATL cannot do it, other companies will not be able to completely pass on the consumption tax."

On this day, other Chinese battery stock prices also closed lower, including Goshen (-6.94%) and EVE (-5.27%) on the Shenzhen stock market and CALB (-3.57%) on the Hong Kong stock market.