China BAK Battery, Inc. (NASDAQ:CBAK)

CAPS Rating: 1 out of 5

Engaged in the manufacture, commercialization & distribution of a variety of standard & customized lithium ion rechargeable batteries for use in cellular telephones, as well as various other portable electronic & general industrial applications.

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Player Avatar lucky9999 (< 20) Submitted: 12/23/2009 1:08:05 PM : Outperform Start Price: $2.32 CBAK Score: -35.61

he massive build out by CBAK secures their future supply of natural resources (Hubei), the fully automated plant (Tianjin) insures battery conformity (major advantage over BYD) and the R & D facility will help to bring down the cost for batteries over the next few years; a major objective for ALL battery manufacturers.

The anticipated demand for LiFeFO4 batteries going forward is astronomical: From $32M in 2009 to $22B by 2015

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Member Avatar TheGrtGdOM (55.98) Submitted: 12/24/2009 12:08:52 PM
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The lithium battery market overall is expected to grow from $875 million in 2010 to a low end of $8 billion (Pike Research) to a higher end $32 billion (US Dept of Energy) by 2015. Most of that growth is expected to be in the Chinese market as China's stated plan is to build an EV based auto culture. China has its own lithium deposits, and dominates the current supply of rare earth metals (also needed for these batteries). It will certainly supply all the batteries used there and likely a large share of those used elsewhere.

CBAK has the capacity built for large volume automated standardized production, established expertise in the field, and has deals being worked out with several of the Chinese majors (including Dongfeng, Nissan's Chinese partner). Yet they are currently with a market cap of 1/13th of A123 and a thousandth of hand labor based BYD (whose obvious standardization difficulties you allude to).

Yup, good call. But be patient: this stock is volatile as it is lightly traded and small amounts of attention or impatience by major institutional investors can cause it to double or halve in a week or less and then back again. Buy this only if you have the gut that can take a ride up and down and up again or you'll puke. Hold it for 3 or 4 years and you'll not be disappointed though.

Member Avatar lucky9999 (< 20) Submitted: 12/29/2009 12:01:37 AM
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Thanks a million for sharing.I've appreciated your knowledge in these threads.Overall this company seems to attract those who are a bit more analytic about their investment than many other fool scoreboard.

Certainly a recovering market for laptops and netbooks, etc. would bring in some better margin business than their cell phone replacement segment has. And there is an expectation that as the economy recovers some the volume orders of Tier One OEMs (like HP, Dell, and Lenovo) will make that segment profitable.Their capacity is the two edged sword. They have invested mightily in having great capacity. If fairly fully utilized they then get economies of scale and can undercut the competition on price while giving high quality. But underutilized the per unit cost to them is more (same fixed costs divided over fewer units) and even if the market would bear them passing that cost on their interest is in pricing low enough to get the volume to grow to a point that it is more profitable.

That same issue is their gamble in the EV segment. At large volumes their cost per unit can be such to make a very nice margin while still undercutting the competition's price. When you compare them to their competition- BYD, Lishen, AONE, ABAT- none of those have CBAK's automation for battery conformity and capacity for mass EV battery production- the route the government has announced as its goal. Having that capacity and the established expertise and quality control has put them in the position that many us here believe most of the big Chinese domestic automakers will use them, but it has also put them in the position of having to wait until that game develops. At this point it is a tough thing to wait out.

You are right. This stock may take couple years to take off with some volatility. It is like through a roller coaster ride extraordinaire. My stomach can handle the ride without throwing up. But anyone else buying in should know the kind of ride they are looking at.

Member Avatar PavewayIII (< 20) Submitted: 12/30/2009 12:21:52 AM
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"The anticipated demand for LiFeFO4 batteries going forward is astronomical: From $32M in 2009 to $22B by 2015"

Is CBAK producing a lithium iron phosphate battery now? It sounded (from the 10K) that they were only planning on making LiPO chemistry batteries at the new plant. A123 uses the newer LiFeFO4 tech - I think they call theirs "nanophosphate". Was that what the patent suit was a few years ago?

Member Avatar lucky9999 (< 20) Submitted: 12/30/2009 12:34:03 PM
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I am not sure, but heard some of patents just cover US . You can check it out

Member Avatar TheGrtGdOM (55.98) Submitted: 12/30/2009 1:12:30 PM
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PavewayIII, Lithium Phosphate = Litihum Iron Phosphate = LiFePO4 (not LiFeFO4). CBAK's big lines are LiFePO4 for the high power segment. They also make Li-ion and Li-poly.

The patent suit has to do with a claim that Hydro Quebec owns the LiFePO4 intellectual property rights. It is mainly an issue for A123 although few seem too worried about it, but as CBAK made those exact batteries for A123 at A123's start there is an issue that they may have some secondary exposure. CBAK's management claims that their current LiFePO4 batteries are their own product. A123 does not seem to dispute this.

lucky9999, thank you for the kind words and a btw ... do remember to use quote marks when cutting and pasting from what someone else wrote on another board, you never know when you are quoting it to the person who originally wrote it! (Gabe is actually my son but I use his account for that board as I do not have one. I also come up as Robyn on another board that comes up under my wife's account.) :)

Also the other issue with BYDs hand made shop approach besides standardization is that labor costs should be rising in China over the next several years as standards of living increase. This could hurt their cost competitiveness as well as their quality control issues.

Member Avatar PavewayIII (< 20) Submitted: 1/1/2010 7:46:37 PM
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"...LiFePO4 (not LiFeFO4)."

Thanks, TheGtGdOM. I've seen 'LiFeFO4' mentioned a few times - it must have been a mistranslation or typo. I thought it was just (yet) another kind of new anode.

And CBAK's 10K and website just describe all thier high power batteries as 'lithium-ion'. I was assuming meant the first-generation lithium cells that used cobalt oxide or magnesium oxide anode - that would have been an issue. It's good to know CBAK is using the latest/greatest chemistry.

Member Avatar jfacciuto (< 20) Submitted: 12/16/2010 6:37:08 PM
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LUCKY99999........WHAT'S YOUR TAKE ON CBAK TODAY.........I'VE BEEN ON THIS FOR A YEAR OR SO....I STILL THINK IT'S A LONG TERM HIT......

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