Bulletin: Contemporary Amperex Technology's Capacity Expansion Supported By Margin Recovery

This report does not constitute a rating action. HONG KONG (S&P Global Ratings) Aug. 25, 2022--We expect that Contemporary Amperex Technology Co. Ltd. (CATL; BBB+/Stable/--) will continue to see strong revenue growth supported by robust electric vehicle (EV) demand. This, together with the profitability improvement we anticipate, will likely help to narrow the battery maker's negative free operating cash flow (FOCF), and keep its leverage low over the next two years. The progress of CATL's revenue expansion aligns with our expectations. The company's revenue grew 156% in the first half of 2022, mainly attributable to 115% growth in EV sales in China. EV sales penetration reached 24% in China during the same period. Although the growth of the EV market

...HONG KONG (S&P Global Ratings) Aug. 25, 2022--We expect that Contemporary Amperex Technology Co. Ltd. (CATL; ###+/Stable/--) will continue to see strong revenue growth supported by robust electric vehicle (EV) demand. This, together with the profitability improvement we anticipate, will likely help to narrow the battery maker's negative free operating cash flow (FOCF), and keep its leverage low over the next two years. The progress of CATL's revenue expansion aligns with our expectations. The company's revenue grew 156% in the first half of 2022, mainly attributable to 115% growth in EV sales in China. EV sales penetration reached 24% in China during the same period. Although the growth of the EV market will likely slow after strong sales in the first half of 2022, we believe the company's revenue will still grow 110%-130% in calendar 2022 and 50-70% in 2023, on continual market expansion. Supportive government policies should continue to improve customer acceptance of EVs and increase...

Bulletin