China's CATL sees profit swing back to growth in Q1

CHINESE electric vehicle battery giant CATL reported a rise of 7 per cent in first-quarter profit on the year, a stock filing showed on Monday (Apr 15), reversing a profit decline in the fourth quarter despite a tussle with smaller rivals in the world’s largest auto market.

CATL produced a profit of 10.5 billion yuan (S$2 billion) for January-to-March period, off the back of a 10.4 per cent drop in revenue to 79.8 billion yuan.

The EV battery giant posted its first quarterly profit fall since 2022 in the fourth quarter. But some are seeing stronger fundamentals developing in early 2024.

Morgan Stanley cited them in March as it re-rated the shares to overweight from equal-weight.

And hours before the earnings release, Moody’s Ratings said it had upgraded CATL’s credit ratings to A3 from Baa1 and changed the outlook to stable from positive.

The credit rating agency cited CATL’s “steady earnings, low leverage and an increasing net cash position, even as price competition is constraining revenue growth.”

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CATL’s market share by batteries in China-made EVs stood at 44.9 per cent in March, down 10.3 percentage points from the previous month, but it still netted a 48.9 per cent share of the domestic market in the first quarter, well above its 2023 levels, according to data from the China Automotive Battery Innovation Alliance.

The market share of second-ranked BYD grew to 26.8 per cent in March from February while the third placed rival CALB grew to 6.7 per cent over the same time period. REUTERS