Are U.S. Investors Missing Out on the Biggest Company They’ve Never Heard Of?

Hong Kong is prepping what’s likely to be the largest new-stock listing of 2025. But U.S. investors will miss out.

I call Contemporary Amperex Technology Co. Ltd. the “biggest company you’ve never heard of.” That’s because the battery maker – better known as CATL – has to date been listed only in Shenzhen, shares that are off-limits to the vast majority of global investors.

Still, CATL (SZ:300750) is the world’s largest maker of lithium-ion batteries. The company will raise as much as $4.6 billion ($35.7 billion in Hong Kong dollars) if it prices the 117.9 million shares on offer at the indicative price of HK$263, and exercises the 15% overallotment option, as is likely. It is due to list under the Hong Kong ticker 3750.

These will be H shares in the global offering, which represent China-based companies that are listed overseas. Hong Kong has a totally open investment system, allowing international investors to buy and sell without limits. So this is technically an “offshore” offering for CATL.

Military List Inclusion a 'Mistake'

To date, CATL has only had A shares on offer. The Hong Kong stocks are being offered at a 6% discount to the Shenzhen shares before the pricing. In general, A shares trade at higher multiples in Shenzhen and Shanghai than stocks in Hong Kong, due to the limited roster of mainland listings, particularly in terms of high-quality companies. It’s also typical to offer a slight discount to encourage interest in the offer.

The Hong Kong offering excludes onshore U.S. investors. CATL is attempting to avoid complications down the line by voluntarily restricting the offer to exclude U.S. investors, given the potential for geopolitical conflict that could buffet the company.

As I noted in January, CATL was added to a U.S. Department of Defense list of “Chinese military companies,” alongside Tencent Holdings TCEHY (HK:0700). Both companies say the designation is a “mistake.” That list has limited ramifications, and CATL is not (yet) on a separate list maintained by the U.S. Treasury of sanctioned Chinese companies that are off-limits to U.S. investors.

But CATL founder Robin Zeng and the executive team are taking a conservative approach. Videogame maker NetEase NTES (HK:9999) in 2020 and the electric-car company Nio NIO (HK:9866) this March did exactly the same with their Hong Kong offerings. But they are both already listed on Wall Street.

Cornerstones Take Big Blocks of Stock

Wall Street investment banks BofA Securities and J.P. Morgan JPM have resisted political pressure to avoid the CATL offering, which they sponsor alongside the Chinese investment banks CICC (HK:3908) and China Securities International. Goldman Sachs GS and Morgan Stanley MS are also taking part as bookrunners.

Hong Kong has a system of “cornerstone” investors, where institutions are offered the opportunity to buy large blocks of stock. According to the prospectus, 23 cornerstone investors are taking up around $2.6 billion of the shares in the offering. The Kuwait Investment Authority and the Chinese oil giant Sinopec’s Hong Kong arm have each pledged to invest $500 million in the offering. The Hong Kong branch of Swiss bank UBS has signed up for $100 million, with Korean brokerage Mirae Asset taking $60 million.

Oaktree Capital is identified as a cornerstone investor taking $75 million in shares. It is U.S.-based but must be holding the shares via an offshore account. The Oaktree Emerging Markets Equity Fund is identified as one of the Oaktree funds taking up the shares.

CATL listed in Shenzhen in 2018, on the ChiNext market. That Nasdaq-like board has a greater tech focus for its listings than Shanghai. But all A shares are available only to mainland Chinese investors, or the very largest of investment banks if they’ve been able to secure a quota to trade mainland stocks. CATL has also been added to the roster of Shenzhen stocks that Hong Kong investors can buy via the Stock Connect Scheme.

Due to Start Trading on Tuesday

So Chinese companies list in Hong Kong to access a global investment base. Mainland China is far more restrictive in its rules on stock trading and currency exchange, meaning The H shares are denominated in Hong Kong dollars and subject to Hong Kong listing rules, even if parent CATL is subject to mainland Chinese law.

The stock is due to start trading in Hong Kong on Tuesday. Prior to the Hong Kong listing, the Shenzhen shares had been looking at a loss so far this year. But they have rallied as the listing approaches, and are now basically flat in 2025, up 0.5% after a 12.3% gain in May.

Are U.S. investors dodging a bullet? The CATL share price now is at the same level it first crossed in 2021. Since then, the share price had drifted lower into 2024, before picking up last September when Chinese stocks as a whole staged a massive rally.

Those gains were inspired by Beijing’s pledge to stimulate the economy. Chinese Pres. Xi Jinping has recently attempted to woo private business and tech entrepreneurs in particular. But the legacy of the Chinese Communist Party’s war on Big Tech, coupled as it is with a downward spiral in property prices, has resulted in shaky business and consumer confidence within China.

CATL is based in Ningde, a port city about half-way up China’s coast, in Fujian Province. It says its batteries are installed on some 17 million vehicles, or around one-third of the electric vehicles operating around the world.

Hard-Charging Competition

It is in a fierce competition with EV and battery maker BYD BYDDY (HK:1211). That’s why CATL stresses its market share of the “high-end” EV market in China. Recently, BYD has been winning, leading to a 62.8% rally in its shares this year alone.

BYD makes the batteries for its own EVs, with its cheapest models selling for less than $10,000. BYD also has a spinoff BYD Electronic BYDIY (HK:0285) that makes parts for most tech gadgets, including smartphones, drones, and household devices.

Both BYD and CATL have a solid history of delivering earnings. CATL hasn’t delivered a quarterly loss since it listed in Shenzhen. BYD has turned a quarterly loss only once.

The future success of both shares will depend on their delivery of rapid-charging batteries. As I noted at the time, BYD shares hit a record high after the company said in March that it could power a vehicle in much the same time that it takes to refuel a gasoline car, with a 400 kilometer (249 mile) charge in just five minutes.

Then CATL said in April that it had produced an EV battery that could outdo that, with a 520-kilometer (323 mile) range in five minutes of charging time.

The question in both cases is whether such batteries can be mass produced, and at what cost. CATL says it will use 90% of the stock-offer proceeds to expand with its European production base in Hungary.

I’m hedging my bets. I have subscribed for a small number of shares in CATL, and currently hold my biggest equity position in BYD. I see a rosy future for EVs and battery producers. But Chinese EV makers, and battery makers, may also go belly up as the industries develop. Both BYD and CATL look like industry leaders, and winners, to me. 

At the time of publication, Alex Frew McMillan was long CATL and BYD.