There’s Power In This Battery Stock

In 2008 the Chinese purchased 9.4 million cars. That’s a lot of cars.

But, believe it or not, they bought more than twice as many electric bikes (e-bikes)!  E-bikes are affordable, rechargeable, and green. It’s really no wonder that they are selling like hotcakes…

But every motorized vehicle needs one important component… A battery.

 

QUICK FACTS

Ticker                                      ABAT

Industry                                   Industrial Electrical Equipment

Recent Price                            $1.10

Market Cap                              $83.7 m

Shares Outstanding                  76.1 m

Average Volume                       727,053

Dividend Yield                          N/A

Website                                  http://www.zqpt.com/en/

 

COMPANY DESCRIPTION

Advanced Battery (ABAT) has two primary sources of revenue. Batteries for e-bikes make up about 42% of the company’s revenue. Rechargeable polymer lithium- ion batteries make up the other 68%.

Each one of those products is delivered by its own subsidiary.

Harbin Zhongqiang Power is the battery subsidiary. They produce batteries for commercial and industrial purposes, as well as transportation batteries.

In 2009 Advanced Battery acquired Wuxi Angell Autocycle. With that acquisition came facilities capable of manufacturing 500,000 units a year. They produce a variety of transportation options, like e-bikes, scooters and motorcycles just to name a few.

 

FINANCIALS

Revenue has been exploding over at ABAT. In 2008 they were making $45 million. That was up to $63 million by 2009. In 2010 revenue was up over 50%.

This year the numbers are off the charts.  The company’s already reporting almost $60 million in revenue… and that’s just for the first two quarters.

But revenue isn’t the only thing growing… Net income is up 37% for the last six months!

The company had enough money on hand to pay for the acquisition. ABAT carries no long-term debt.

 

KEY METRICS ANALYSIS

Trailing P/E                                       2.2x

Price / Sales                                     0.72x

Return on Assets                              12.6%

Insider ownership                               12%

Short Ratio                                        3.4 x

Current Ratio                                     13.7 x

Total Debt To Equity                            N/A

 

RECENT EVENTS

In January 2011 ABAT’s subsidiary Harbin acquired another lithium battery company.  Shenzhen Zhongqiang New Energy Science & Technology was purchased for $20.5 million.

The company manufactures small lithium batteries for things like MP3 players and phones. ABAT’s aim was to diversify their revenue stream.

Shenzen Zhongqiang also has the added bonus of being located in the city Shenzhen. Before the acquisition the company lacked much of a foothold in that large southern city. This strategic purchase will rectify that weakness in their distribution chain.

 

MANAGEMENT TEAM

Mr. Zhiguo, Fu – CEO

Mrs. Guohua, Wan – CFO

Mr. Hongjun, Si – Chief Technology Officer


STOCK ANALYSIS

 

 

 

 

 

 

 

Chart Courtesy of StockCharts.com

This stock has really slumped down since the beginning of the year, but that’s due to the global economic slowdown and crazy market action.

Remember, China’s auto-industry is growing like a weed!

ABAT’s 52-week low was $.79 and the 52-week high was $4.35.  Right now the stock is trading at $1.10.  The 50-day moving average is near $1.27 a share and the 200-day moving average is at $1.65.  The company has a market cap of $83.7 million and 76.1 million shares outstanding.

 

 

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