China's CATL listing sparks expert worries over ‘hazy’ future of unicorns in industry
Chinese lithium battery maker Contemporary Amperex Technology Co (CATL) saw its share price surge by 44 percent on Monday, the day it got listed on Shenzhen's NASDAQ-style ChiNext board.
CATL, based in East China's Fujian Province, sold 217 million new shares at an initial price of 25.14 yuan ($3.92) each, according to a filing posted on the Shenzhen Stock Exchange.
The battery maker is raising funds to finance business expansion as China promotes electric vehicles.
CATL reportedly supplies major domestic carmakers like SAIC Motor and has agreements with mega international automakers like BMW and Volkswagen.
The company is considered by the market as a "unicorn" in China, which are start-ups that become highly valuated in a relatively short period of time.
The Chinese government has already taken measures to facilitate the listing of unicorn firms in the A-share market.
But experts expressed worries about the future of unicorn firms related to the lithium battery industry.
Wu Chenhui, a Beijing-based independent industrial analyst, told the Global Times that the rise of lithium battery firms is more or less based on a presumption that new-energy cars are projected to easily replace traditional oil-fueled cars.
"But such presumption is 'hazy,' as there are still some important technical bottlenecks related to new-energy car safety that have not been solved so far," he said.
Wu said that the price of lithium has tripled since 2015, and some domestic lithium battery companies have been busily buying stakes in overseas lithium mines. "But now, it has reached a point where lithium prices, or related company valuations, could slow in growth or even slump shortly," he said.
Qian Qimin, a senior analyst at Shanghai-based Shenwan Hongyuan Securities, said that there is a phenomenon whereby unicorn firms are a bit too "chased after" in the A-share market.
"Whether the heat will continue ultimately depends on the business performances of those companies, instead of just on policy support," Qian told the Global Times on Monday.
