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(Bloomberg) — Contemporary Amperex Technology Co. Ltd. shares jumped in China after the world’s biggest electric-vehicle battery manufacturer unveiled a buyback plan following strong earnings for the first half.
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The company plans to buy back 20 billion yuan to 40 billion yuan ($3 billion to $5.9 billion) worth of A-shares, citing confidence in growth prospects, according to a statement late Friday. CATL reported a 42% increase in first-half profit, in part due to robust demand for energy-storage systems.
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CATL climbed as much as 5.4% in Shenzhen on Monday to 403.6 yuan, the biggest intraday jump in more than a month, before pulling back slightly. The purchase price under the buyback program is capped at 573 yuan, and shares acquired will be canceled. The company’s shares in Hong Kong also surged at the open, before giving up all the gains and trending lower.
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“Considering the company’s financials, industry position, and capital market factors, the company sought the buyback in order to address the potential for a significant drop in the company’s stock price and a mismatch between valuation and actual value due to market volatility,” CATL said in a filing on Sunday, citing minutes from an investor call on Friday.
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The battery maker has joined a number of Chinese companies announcing share buybacks in recent weeks after a selloff in artificial-intelligence and chip stocks spilled over into the broader market. CATL posted a 55% increase in first-half revenue, with energy storage becoming a bigger contributor.
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The energy-storage market “is expected to maintain a relatively rapid growth this year and next,” CATL told investors on Friday. “The company’s long-term profitability remains relatively stable.”
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—With assistance from Jing Jin.
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