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Chinese EV Battery Maker CALB Targets Top Three After IPO

Chinese EV Battery Maker CALB Targets Top Three After IPO

(Bloomberg) -- Newly Hong Kong-listed CALB Co. aims to become a top-three player in the electric vehicle battery industry within five years, Chief Executive Officer Jingyu Liu said.

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Shares in the Changzhou, Jiangsu-based firm ended at HK$38, matching the IPO price after dipping as low as HK$37.15. The offer raised about HK$10.1 billion ($1.3 billion), with the shares sold at the bottom of a marketed range that went as high as $51.

“We want to reach top five in the global EV battery market in a year’s time, and be third within three-to-five years,” Liu said in an interview with Bloomberg Television.

The company is currently building out production lines that will have a combined annual capacity of more than 200 gigawatt hours. “This increased battery capacity will place us among the top few globally,” said Liu, the only female CEO of a top 10 global battery maker.

A New Chinese EV Battery Giant Has Emerged: Anjani Trivedi

China Aviation Lithium Battery Technology Co., as its formally known, was formed in 2015 under Luoyang Co., a wholly owned unit of the China Airborne Missile Academy, which is part of state-owned aerospace and defense firm Aviation Industry Corp. of China Ltd.

The lofty goals for the Xpeng Inc. supplier come with a need to pay for the expansion. Liu said going public was a “natural next step” in the high-growth sector.

“Our IPO funds will be used for business expansion and R&D,” Liu said. “But our finances have been stable and we have sufficient capital for current needs.”

CALB is projecting a “big” increase in domestic battery market share as it increases output, followed by “significant growth” from 2024 in overseas markets, she said.

The company ranks seventh among global EV battery suppliers, according to SNE Research, but is dwarfed by larger Chinese rival Contemporary Amperex Technology Co. Ltd., followed by South Korea’s LG Energy Solution Ltd. and BYD Co., all whom have deep pockets and equally high ambitions to expand their market share.

Market leader CATL has already unveiled around $20 billion worth of spending commitments this year on a slate of factories to be built at home, and as far away as Hungary and resource-rich Indonesia.

As the EV supply chain grapples with soaring costs of key battery materials like lithium and copper, CALB has seen through the worst of the industry-wide price shocks, Liu said. Margins have continued to grow, with first-quarter profit higher than a year earlier, and second quarter earnings higher than the first, she said.

“We expect our profits to continue increasing in every subsequent quarter,” she said. “We’ll reduce supply chain costs through working with our upstream suppliers and battery recycling.”

Even at a smaller size than initially expected, CALB is the third-largest IPO in Hong Kong this year, as mid-to-large sized deals return after a slow first half. Still, funds raised in the city are down about 75% since the start of January as rising interest rates roil markets and keep issuers on the sidelines.

Half of the 18 companies that have listed in Hong Kong after offerings larger than $100 million this year ended their first session underwater. Five finished little changed and only four rose on day one.

CALB’s debut comes one week after a disastrous first-day of trading for Chinese EV maker Zhejiang Leapmotor Technology Co., which plunged 34%, after raising $800 million in an IPO that was priced at the bottom of the marketed range. The slide was the biggest first-day decline for a listing of that size or bigger on record in the Hong Kong.

Huatai International Ltd. is the sole sponsor of CALB’s Hong Kong IPO.

(Updates with detail of share trading. An earlier version corrected province in China in 2nd graph.)

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