Foreign investors have been pouring into Chinese battery maker CATL’s stock. Its Hong Kong-listed shares, which tend to be traded by offshore investors, hit a record 50 per cent premium to their mainland equivalent last month. That suggests they are increasingly optimistic about its future earnings.
CATL accounts for more than 40 per cent of the world’s electric vehicle battery market and, amid competitive pressure, has managed to maintain relatively strong profitability, with an operating margin of 18 per cent. But that much is not new. What may be changing is how investors view its expanding presence in sectors outside EVs.
One of them is energy storage systems where demand for grid scale storage and data centre backup power has been growing. Demand is also supported by rising volatility in energy markets. That increases the value of storage: users can load batteries up when prices are low and discharge when prices are high.