On October 21, the Hong Kong stock market opened high but turned lower as the Hang Seng Index and the Hang Seng Tech Index both dropped to recent lows, with the Hang Seng Tech Index falling below 4000 points. Mainland China’s power battery company CATL’s H shares fell by 11.41%, marking a significant decline for the second consecutive trading day.
According to closing data, the Hang Seng Index closed at 23,651.87 points, down by 0.90%, while the Hang Seng Tech Index closed at 3994.77 points, down by 1.26%.
Major technology stocks mostly experienced declines on that day, with Tencent falling by 4.04% and its stock price dropping below 400 Hong Kong dollars, and Kuaishou dropping by over 2%. However, storage chip stocks bucked the trend with Silergy Corp. rising by nearly 9% and Montech Innovations gaining over 3%.
On that day, mainland funds trading Hong Kong stocks through the Shanghai-Hong Kong Stock Connect recorded a net outflow of 4.435 billion Hong Kong dollars.
CMB International believes that the market lacks new capital, making it difficult for overall bullish sentiment to emerge in the short term for Hong Kong stocks.
CATL’s H shares closed at 364.8 Hong Kong dollars on that day, marking an 11.41% decline and hitting a new low for over a year. Combined with the 6.58% decline from the previous day, the stock experienced a total decline of approximately 17.2% over the two trading days.
Its A-shares also fell by 12.03% on the same day, closing at 227.90 yuan, hitting a new low in 17 months, and recording the largest single-day decline in over two years.
Reported by the “First Financial Daily,” CATL’s H shares have fallen by about 54% from their historical high in June this year.
CATL’s third-quarter report released on the evening of October 20 showed that the operating income for the third quarter was 165.221 billion yuan, a year-on-year increase of 58.58%, reaching a new quarterly high. The net profit attributable to the shareholders of the listed company was 21.246 billion yuan, a year-on-year increase of 14.54%, but a decrease of 5.77% from the second quarter.
The comprehensive gross profit margin for the third quarter dropped to 20.69%, falling for two consecutive quarters and reaching its lowest point since the fourth quarter of 2022.
CATL’s performance presentation record disclosed on October 21 indicated that the company attributed the profit change in the third quarter to the impact of product structure, consumption tax, and export tax rebates. The company stated that it is currently communicating with customers on how to share the related impacts and did not specify the exact sharing ratio.
Regarding investors’ concerns about next year’s demand, the company mentioned that global demand for power and energy storage batteries “may not be as pessimistic as the market expects”, highlighting growth potential for 2027.
JPMorgan Chase, the U.S. investment bank, downgraded CATL’s Hong Kong stock rating from “overweight” to “neutral” and lowered the target price from 725 Hong Kong dollars to 500 Hong Kong dollars. The bank expressed concerns that the deterioration of profitability in the battery industry is happening faster than expected, and profits in the electric vehicle industry chain are being reassigned.
Citi cited a third-party institution’s research indicating that the production volumes of the top five battery manufacturers in October are expected to increase by only 1% month-on-month, lower than the previous expectation of 7%. Consequently, production forecasts for CATL, Contemporary Amperex Technology (CATL), ATL New Energy, and EVE Energy were revised down.