CATL Shares Rise Sharply on Robust Earnings, Special Dividend
By Jiahui Huang
Contemporary Amperex Technology's shares rose sharply Monday, boosted by a surprise special dividend and robust 2023 earnings.
The Shenzhen-listed shares of the Chinese electric-vehicle battery giant were up 6.1% at 192.07 yuan ($26.69) Monday morning, on track for their biggest intraday gain over the past week, and taking gains so far this year to 17%.
The rise came after the company posted strong 2023 earnings and announced a surprise special-dividend program after the market closed on Friday.
The company's latest earnings are largely in line with its guidance, but on the relatively higher end, Daiwa head of auto, transportation and industrial Kelvin Lau told Dow Jones Newswires.
CATL's net revenue rose 22% to CNY400.92 billion in 2023, while net profit rose 44% to CNY44.12 billion. The company attributed the growth to increasing global demand and its dominant market position.
With lower raw material costs, CATL managed to keep its 2023 gross profit margin at 23%. Fourth-quarter gross profit margin was 25%, according to Citi analysts' calculations, a figure that beat industry forecasts.
"The largest surprise was the distribution of special dividend," Nomura analyst Ethan Zhang said, noting that the company normally pays out a 20% annual dividend like it did in 2022, but added an extra 30% special dividend for 2023.
The special dividend shows that the company has a strong financial position, Zhang added.
"They don't have the urgency to invest more on new capacity expansion," which should partially ease market concerns over industry oversupply, Zhang said.
Despite the intensifying price war this year in China's electric-vehicle market, battery margins will remain in a "cyclical sweet spot" in 2024, with the supply and demand to re-balance in 2025, Citi analysts wrote in a note.
Citi and Nomura both kept their buy rating on the stock. However, Citi raised its target price to CNY292.00 from CNY287.00, while Nomura cut its target to CNY210.00 from CNY225.00.
CATL has a dominant market position as it is a major supplier for major EV brands, including Tesla and BYD.
It was China's top EV-battery maker in February, with a market share of 53%, according to data from China's Automotive Battery Innovation Alliance.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
March 18, 2024 00:06 ET (04:06 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
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