CATL Update

A Deeper Dive into Expansion, Financial Performance, and Market Potential

A week after releasing the review of CATL as the first note of the newly-breaded Substack, and coincidentally the first note of the EV month of November I feel compelled to update it. I believe that I did not come out strongly enough in the original piece and I feel a degree of clarification is warranted. This is an off-schedule post, and is just an extra that I wanted to put out, after going over the Robin Zang interview today, as I think it was THAT important. Zeeker note coming Thursday night/Friday Morning as scheduled.

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I aim to make my company reviews more “Evergreen” as a general rule, the idea being that I lay out the nuts and bolts of the main drivers of any given company and/or theme, and then I can follow up later with changes to assumptions or dynamics. I do not like to focus on quarterly results as drivers, but of course I do follow those at the very least to make sure that the core assumptions underpinning the thesis are holding up. This normally takes shape of big over or underperformance during earnings, and I rush to figure out why this happened. This normally leads to a change in the earnings estimates for the subsequent years and thus a change in target price.

What we’re dealing with here has nothing to do with that. Instead this update is a reaction to an interview that Robin Zang gave to Reuters. Sometimes you listen to CEO for hours and learn nothing, and sometimes a brief phrase can change perception of business’ prospects. This does not change EPS expectations as such, at least not immediately, but it does change multiples that investors are willing to pay.

If one believes in the ability of a company to compound and grow over time, one ought to be more comfortable paying a higher multiple for said company. I believe that today’s interview is exactly that - a reminder to the market that CATL story is only getting started and that real targets for the business are much bigger than being the leading EV battery supplier.

I am of course on record (talking to

Tracy (Chi)

) that I believe that CATL will eventually become China’s most valuable company, and I believe that the pathway to that has been laid our by Mr. Zang today.