Munro Climate Change Leaders Fund on Contemporary Amperex Technology Co. Limited
Thesis
CATL leads the EV battery market with more than one-third share and uses product quality, safety and R&D scale to protect unit profitability. Munro expects stationary energy storage to keep expanding because Chinese storage penetration remains low relative to solar and wind installations, even though recent growth cannot persist at its current pace. Raw-material pass-through contracts and long-standing scale advantages should help cushion lithium volatility and attempts by automakers to build batteries internally. Longer term, sodium-ion and solid-state innovation could extend battery adoption into transport, robotics and data centres, while a valuation below 20 times earnings appears attractive. The fund reduced the holding after a material share decline but remained positive on the company.
“Nonetheless, we remain positive on the stock.”
Key risks
- Chinese energy-storage growth slowing sharply after an exceptionally strong year
- Weak Chinese EV demand and rising lithium input prices pressuring per-unit profits
- Licensing and environmental permits preventing the reopening of CATL’s Jianxiawo lithium mine
- Automakers such as Li Auto developing their own batteries and diversifying suppliers