(Yicai Global) June 8 -- A slew of bearish rumors put the shares of power battery giant Contemporary Amperex Technology under severe pressure today, with the stock slumping by more than 7 percent at one point.

But dip-buying in the afternoon helped CATL [SHE: 300750] to pare its losses before closing up 0.2 percent to CNY460 (USD68.7). That restored its market value above CNY1 trillion (USD149.4 billion).

The negative news surrounding CATL included rumors of huge losses from the company’s investment in futures, and predictions by industry insiders that the firm’s performance in the second quarter will be lower than expected. To make matters worse, a senior executive at battery production rival BYD told Chinese broadcaster CGTN that it is set to supply power packs to Tesla “very soon.”

Yicai Global learned from multiple sources that since yesterday, the investment community has been speculating that CATL’s semi-annual earnings report may confirm more than CNY1 billion (USD149.4 million) in futures investment losses racked up in the first quarter.

CATL insiders, however, denied it: “This must be a rumor. We’re still in the second quarter (so how can we publish a semi-annual report?)”

But the speculation seems grounded. It was rumored during the nickel futures short-selling incident on the London Metal Exchange in March that CATL was also involved. Though CATL later did not clearly respond to whether it held a large number of short positions in nickel at the time, neither did it deny taking part in nickel futures hedging.

CATL’s first-quarter financial report showed a loss of CNY1.56 billion due to derivative financial investments, and according to relevant accounting standards, the Ningde-based company did not include this in its profit and loss for the first quarter.

But some financial sources told Yicai Global that after the disposal of related financial assets, the loss may eventually be reflected in CATL’s earnings sooner or later.

Founder Securities said in a research report, however, that “in hedging operations, although CATL has made losses in the futures market, it has also made positive returns in the spot market, so there is no need to pay too much attention to and interpret the losses caused by that.”

CATL has previously responded to investors that the relevant futures positions of the its hedging operations are protected by spot because they are not for speculation.

Apart from the futures losses that may be included in the company’s half-year earnings report, CATL today was also hit by rumors that its second-quarter performance may be below expectations.

Some institutional sources said that due to the decline in gross profit margin owing to rising raw material prices, CATL’s net profit in the quarter may be lower than the market consensus for CNY3.5 billion.

In addition, Lian Yubo, executive vice president of BYD, one of CATL’s competitors, said today that BYD will soon start supply batteries to US automaker Tesla, which has been CATL’s largest customer.

CATL’s sales to Tesla reached CNY13.04 billion (USD1.95 billion) last year, accounting for 10 percent of its annual revenue.

Editors: Tang Shihua, Peter Thomas