(Bloomberg) -- Contemporary Amperex Technology Co. Ltd. plunged in early trading Thursday after posting its sharpest-ever drop in quarterly earnings last week and disclosing a sizable derivatives liability.

Shares in the Shenzhen-traded maker of electric vehicle batteries tumbled 10.8%, their biggest intraday decline since September 2020, as China markets came back online after a five-day labor day holiday. Ningde, Fujian-based CATL, as the company is better known, had delayed the release of its first-quarter financials by a couple of days.

Read more: CATL Net Income Drops as Battery Giant Posts Derivatives Position

CATL’s net income fell 24% to 1.49 billion yuan ($225 million) for the three months ended March 31 while underlying profit dropped 41% to 977 million yuan. The world’s biggest maker of EV batteries admitted it has been grappling with higher input costs.

CATL also disclosed a 1.79 billion yuan derivatives liability, its first such charge since listing, the origins of which it didn’t explain to investors. According to a person familiar with the matter, CATL is among a group of companies that amassed short positions in nickel in support of Chinese entrepreneur Xiang Guangda, whose Tsingshan Holding Group Co. is the world’s biggest nickel and stainless steel company.

Read more: The 18 Minutes of Trading Chaos That Broke the Nickel Market

Morgan Stanley analyst Jack Lu queried the company’s transparency as he cut the cell maker’s share price target to 325 yuan. 

Lu pointed out that even though CATL generates about 20% of its revenue overseas, it reports no foreign exchange gains or losses. CATL also recorded around 1.2 billion yuan of hedging losses in the first quarter that was booked under “other comprehensive income, leaving risks for the amount to be reclassified to profit and loss, depending on when CATL closes the positions.”

Read more: Jefferies Downgrades CATL to Underperform After 1Q Results

Shares in CATL, which supplies batteries to carmakers including Tesla Inc. and Nio Inc., are down around 38% year-to-date. The company commands a market share globally of about 35%, with nearest rival LG Energy Solution trailing at 15.9%.

CATL’s market share in China, the world’s biggest market for electric cars, was 49.8% in the first quarter of 2022, down 4.2 percentage points from the end of last year, as automakers sought to diversify battery suppliers, according to Fitch Ratings Inc.

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