Shares of Chinese battery maker REPT Battero Energy Co. Ltd. (HK:0666) rose on their Hong Kong debut on December 18, despite what is viewed as a dull year for initial public offerings (IPOs). The lithium-ion battery manufacturer is a unit of the world’s largest nickel producer, Tsingshan Holding Group Co. Interestingly, 0666 shares jumped over 7% in early trade this morning, displaying the attractiveness of the electric vehicle (EV) battery segment.
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REPT Battero Energy specializes in the research, development, and production of lithium-ion batteries. Founded in 2017, the company has a wide range of products, including lithium-ion batteries for EVs, energy storage systems, and portable devices. The company also provides battery management systems and other related services.
Privately held Tsingshan raised HK$2.1 billion in the offering by selling 116 million shares at an average price of HK$18.30 per share. The IPO was priced between HK$18.20 to HK$20.60 per share. The successful listing of REPT Battero symbolizes that the IPO market could be promising for only the most lucrative sectors. The REPT IPO is the fourth-largest listing on the Hong Kong stock exchange so far in 2023.
REPT Battero’s Financial Performance
REPT Battero will use 80% of the IPO proceeds to expand its production capacity at plants in Wenzhou, Foshan, and Chongqing. REPT operates in a highly competitive battery manufacturing market led by industry experts such as CATL and BYD (HK:1211) (OTC:BYDFF), which have considerably increased their production capacities lately. REPT’s market share fell to 1.2% in the first half of 2023 from 1.7% reported earlier. Nonetheless, it remains the tenth-largest Chinese EV battery maker.
A Financial Times report mentioned that the ambiguity about related-party transactions between REPT and Tsingshan’s subsidiaries is one of the major hurdles to investors’ interest in REPT’s listing. REPT remains a loss-making unit despite sales jumping 64% year-over-year in the first half of 2023. Importantly, Tsingshan is one of the top five customers of REPT, with Tsingshan steadily increasing its revenue contribution in percentage terms.
