Musk challengers become billionaires

TOKYO: The Chinese founder of the world’s biggest maker of electric-vehicle batteries and his top lieutenant became billionaires after their company’s shares soared during the first day of trading in Shenzhen.

Contemporary Amperex Technology Co Ltd jumped by the maximum 44% allowed by the exchange, valuing the company at about US$12.3bil. That cemented the position of Zeng Yuqun, CATL’s founder and top shareholder, on China’s rich list with an estimated net worth of about US$3.4bil, according to the Bloomberg Billionaires Index.

Investors are confident that CATL can fend off rivals Panasonic Corp, which makes power packs with Tesla Inc; Warren Buffett-backed BYD Co; and LG Chem Ltd as the increasing popularity of EVs boosts demand for the batteries that move them. CATL, whose customers include Volkswagen AG, previously cut the size of its IPO by more than half, compared with its original ambitions, because of declining margins and a cap imposed by Chinese authorities on price-earnings ratios in IPOs.

The IPO made CATL the biggest company on China’s Nasdaq-style ChiNext list. Zeng, a 50-year-old engineer who started CATL seven years ago, owns a 26% stake. Vice-chairman Huang Shilin holds 12% and has an estimated net worth of US$1.7bil.

Macquarie Bank Ltd in Hong Kong rated CATL “outperform” yesterday and set a price target of 90 yuan, more than double the current price of 36.20 yuan.

CATL, which also supplies Nissan Motor Co, Hyundai Motor Co and BMW AG, last year overtook Panasonic as the world’s largest supplier of EV batteries by sales thanks to increasing domestic demand.

The government’s generous subsidies for new-energy vehicles and restrictions on gasoline cars in some cities will help battery demand quadruple in the next four years in China, Bloomberg New Energy Finance said in a report yesterday. CATL is best-positioned to benefit because of its advantages in capacity and customer base, BNEF said. — Bloomberg