At the implied IPO price of 60.4 yuan per share, CATL trades at more than 40 times earnings. That is well above its Chinese and Korean peers that average between 15 times and 20 times. It trades at 9 times 2016 sales, compared with no more than 4.5 times sales for any of its peers.
Fat margins may be less important to CATL than capturing market share. For the other big battery makers, this fast-growing rival could be a major source of pain.
The only way to make this IPO a success is if they have a credible strategy to capture market share. Credible strategy = have secured massive amounts of lithium (and cobalt) before the IPO.
No brainer, really.
AVZ Price at posting:
23.5¢ Sentiment: Buy Disclosure: Held
