Starting from 2023, there will be information about CATL (300750. SZ) has been widely spread in the market, and now the rumors have finally come true.

On December 27, CATL officially announced that it would go public in Hong Kong.

Although the amount of funds raised has not been disclosed, according to media reports, the amount raised may be around US$5 billion, corresponding to about 3% of the H-share issue.

According to the rules of the Hong Kong Stock Exchange, the public float ratio for a listing of shares must not be less than 25%, but exemptions can be applied for in accordance with special circumstances.

However, judging from past practice, the proportion of H-shares issued by A-share companies will not be less than 5%.

However, SF Holdings (06936), which landed on the Hong Kong Stock Exchange this year, became the first A-share company with a H-share issuance ratio of less than 5%.

This may be the internal logic behind the previous information about CATL's fundraising amount, which is also expected to ease the fundraising pressure of its H-share issuance to a certain extent.

CATL's cash reserves are still relatively abundant, with cash and cash equivalents reaching 234.954 billion yuan as of the end of the third quarter of this year.

At the same time, however, the foreign exchange reserves needed to go overseas are facing certain challenges. As of the end of June this year, the balance of US dollars and euros was 6.735 billion yuan and 3.858 billion yuan respectively.

Regarding the necessity of listing in Hong Kong, CATL said that it will "promote the strategic layout of globalization and build an international capital operation platform." ”

"Less than 5%" second order?

CATL's listing in Hong Kong did not exceed market expectations.

Previously, according to media reports, CATL planned to go public in Hong Kong, but it did not deny this at that time.

At present, CATL has not disclosed the amount of funds raised.

According to previous media reports, CATL plans to raise US$5 billion, equivalent to about 36.5 billion yuan, which corresponds to about 3.2% of H-share issuance, but this information has not yet been confirmed by CATL.

In fact, the above-mentioned backward issuance ratio is related to the current changes in the H-share issuance practice of the Hong Kong Stock Exchange.

According to the Listing Rules of the Hong Kong Stock Exchange, at least 25% of the aggregate number of issued shares (excluding treasury shares) of an issuer must be held by members of the public, subject to exemptions in exceptional circumstances.

According to Tradewind (ID: TradeWind01), it was learned from investment bankers close to the Hong Kong Stock Exchange that after Midea Group (00300), an A-share company that has landed on the Hong Kong Stock Exchange this year, applied for exemption, the proportion of H shares issued was 7.49%.

However, for a long time in the past, the proportion was not less than 5% in principle, and this year, SF Holdings' issuance broke this potential constraint, and the H-share issuance ratio was as low as 3.41%, becoming the first A-share company with an H-share issuance ratio of more than 5%.

"In the process of practical operation, the proportion of H-shares issued by A-share companies after communication is generally more than 5%, but SF Express has broken through this boundary, and now encourages A-share companies to list on Hong Kong stocks, and the proportion of H-shares issued by large-capitalization companies will be relaxed in the future." An investment banker in Beijing said.

This may further reduce CATL's fundraising pressure.

According to the calculation of 5% of the H-share issuance ratio, CATL is likely to raise 57.6 billion yuan, which is expected to become the fourth largest financing scale in the history of the Hong Kong Stock Exchange in the past decade.

However, some market participants believe that in order to reduce the impact of equity dilution, CATL's issuance ratio may be less than 5%.

If calculated according to the proportion of H-share issuance of 3%-4%, the fundraising scale of CATL will be 34.5 billion yuan to 46 billion yuan.

This means that if CATL can issue at this ratio, it may become the second A-share company after SF Holding to issue H-shares with a ratio of less than 5%.

This may also be speculation, and CATL's final fundraising may not be limited to US$5 billion.

The

most obvious counter-example that exceeded expectations was the previous listing of the United States in Hong Kong.

Before Midea Group went public in Hong Kong, the South China Morning Post said it raised US$1 billion, but the final amount raised reached US$4.5 billion.

The sword is aimed at the "ammunition" of globalization

CATL is not "short of money".

As of the end of the third quarter of this year, CATL's cash and cash equivalents reached 234.954 billion yuan.

As early as 2022, CATL also set an additional 45 billion yuan for the construction of lithium-ion battery production bases and other projects.

As of the end of June this year, CATL's unused funds still reached 9.312 billion yuan, of which 6.437 billion yuan was used for cash management.

In fact, it may be foreign exchange that needs to be filled.

As of the end of June this year, CATL's foreign currency balance was US$6.735 billion and 3.858 billion euros, respectively.

For example, there may be some pressure on CATL, which is building factories overseas, for foreign currency reserves.

In December this year, CATL announced plans to establish a joint venture with Stellantis, the world's fourth-largest automaker, in Spain, with each party holding 50% of the shares, and to build a joint venture battery plant in Zaragoza, Aragon, Spain, with a total investment of up to 4.038 billion euros.

Based on the 50% shareholding ratio, CATL needs to invest at least 2.919 billion euros.

At the same time, the first phase of CATL's Hungarian plant is still under construction.

With the increase of overseas layout, CATL's demand for foreign exchange is gradually increasing, but the proportion of its overseas income is relatively limited.

In the first half of 2024, CATL's overseas revenue will be 50.529 billion yuan, accounting for about 3% of total revenue.

With the increasingly fierce competition in the domestic market, going overseas is indeed an important way for CATL to open up performance space, but the growth of the new energy vehicle market in Europe is not significant.

According to Dataforce, sales of pure electric vehicles in Europe fell 0.4% year-on-year in November, and sales fell 1.4% in the first 11 months of this year. In November, the European Automobile Manufacturers Association lowered the market share of battery electric vehicles to 21% by 2025 from 27% at the beginning of the year.

As a partner of CATL, Stellantis is not having a good time, with revenue and net profit of 85.017 billion euros and 5.624 billion euros in the first half of 2024, respectively, a year-on-year decrease of 13.57% and 48.51%.

This may bring more pressure to CATL's going to sea.

The warm wind of policy is blowing frequently

In addition to CATL, the "first brother of medicine" Hengrui Pharmaceutical (600276. SH), semiconductor company Longsys (301308. SZ) and A-share companies such as Fengyi Technology (688279.SH) are planning to list in Hong Kong, planning to further open up overseas markets.

This is also inseparable from the strong support of the regulator.

On the one hand, in order to promote the listing of A-share companies in Hong Kong, the Hong Kong Stock Exchange plans to further lower the listing threshold in the near future.

HKEX proposes to lower the threshold for A+H share issuers to list in Hong Kong to at least 10% of the total number of issued shares (excluding treasury shares) of the same class of A+H share issuers; or the relevant H shares have an expected market capitalisation of at least HK$3 billion at the time of listing and are held by members of the public.

This is a significant reduction from the H-share issuance ratio of not less than 25%.

"A higher proportion of H-shares will put more pressure on companies with higher market capitalization, as they may not necessarily be able to raise such a high size of funds." An investment banker in Shanghai pointed out.

For example, the person said that if an A-share company has a market value of 5 billion yuan, it needs to raise 1.25 billion yuan according to the past 25% issuance ratio, but if the company's market value is 50 billion yuan, the fundraising scale needs to reach 12.5 billion yuan.

If the proposal of the Hong Kong Stock Exchange is implemented, the pressure on A-share companies to raise funds in Hong Kong stocks will also be further reduced.

On the other hand, the China Securities Regulatory Commission (CSRC) is also continuing to support domestic companies to list in Hong Kong.

In April this year, the China Securities Regulatory Commission (CSRC) issued a document stating that it would further strengthen communication and coordination with relevant departments to support eligible mainland industry leading enterprises to list and raise funds in Hong Kong.

"In the past, some A-share companies with relatively high market capitalization wanted to list on the Hong Kong stock market, and they needed to communicate with the domestic regulator for a long time, because the relevant authorities were worried about the impact on the stock price of the domestic market." An investment banker in East China pointed out, "But the current policy is still relatively supportive of A-share companies to list on the Hong Kong stock market, and the Hong Kong Stock Exchange and Hong Kong's regulators are also very cooperative." ”

However, the person also admitted that Hong Kong's fundraising is more market-oriented, which is also a test for the company's issuance pricing.

"Although the threshold will be further lowered, the main problem with Hong Kong stocks is that it is difficult to issue, and cornerstone investment and follow-up transactions cost money. It may be that the leading companies will be better, but it is still difficult for companies with average market recognition to issue and raise funds. The aforementioned person further pointed out.

This article is compiled from "Wall Street News", Zhitong Finance Editor: Zhang Jinliang.