(Yicai Global) June 29 — Shares in Contemporary Amperex Technology faltered today after the Chinese electric car battery giant said it will invest half the funds secured in a recent fundraising scheme, around CNY23 billion (USD3.4 billion), that is meant to go towards capacity expansion in wealth management projects.
CATL’s share price [SHE:300750] was trading down 2.55 percent at CNY530.12 (USD79) as of 12:30 p.m. China time today.
CATL will use a maximum of CNY23 billion to buy safe, principal-protected investment products with good returns over the next 12 months, the firm said on June 27. The Ningde, southeastern Fujian province-based company completed a CNY44.9 billion private placement of new shares just four days earlier to build four new factories.
In the original fundraising plan, announced in August last year, CATL had set its sights on securing CNY58.2 billion. However, the target was queried by the Shenzhen bourse last September as excessive.
It is not excessive at all, CATL responded. More money is needed to build the production bases that have been on the drawing board since 2020. However, CATL did revise downward the fundraising target to a maximum of CNY45 billion, and the new scheme was approved by the China Securities Regulatory Commission in April.
CATL intends to continue to use idle funds to buy wealth management products to increase their return, so long as these investments have no impact on the eventual allocated use of the funds and on the firm’s normal operations, it said.
The company, which is not short of money and had cash in hand of CNY100.3 billion (USD15 billion) as of March 31, has long chosen to invest unused capital in wealth management products and has generated a handsome return in recent years. It earned CNY26.8 million (USD4 million) in 2019, CNY173 million (USD25.8 million) in 2020 and CNY69.5 million last year from investments using the CNY5.4 billion it raised in its 2018 initial public offering and the CNY19.6 billion gained through a non-public share issuance in July 2020.
Editors: Xu Wei, Kim Taylor