Electric vehicles (EVs). Things solar in general. GPS (global positioning systems) and other consumer electronic devices such as digital cameras, cell phones, MP3 music players. Military vehicles and devices.
All of the above are growth industries or products – and Advanced Battery Technologies has products for all of the above applications. The company’s stock is up roughly 800%, thus far, in 2007. 800%! The beauty of it is that this company is still tiny – and, thus, not on the radar of many – and growing. As noted in the subtitle, revenue for the latest quarter was over double that of the same quarter of last year – and earnings more than quadrupled. Earnings are growing much faster than revenue – meaning profit margins are fattening. And the company has little long-term debt to boot. So, the valuation must be sky-high, right? No — the P/E (trailing 12 mos.) is 39, so the stock valuation seems downright cheap based upon current earnings growth.
Advanced Battery Technologies’ stock just (October 9) began trading on the American Stock Exchange (AMEX) under the ticker symbol GBT. Previously, it had traded on the OTC bulletin board. This move to an AMEX listing is in and of itself a good sign as companies must meet more stringent requirements to list on one of the major U.S. exchanges (NYSE, AMEX, Nasdaq).
The company, founded in 2002 and with administrative headquarters in New York City and R&D and manufacturing facilities in China, develops, manufactures and markets rechargeable polymer lithium-ion (PLI) batteries to power products primarily in these categories:
- Vehicles – cars, buses, scooters, golf carts, agricultural vehicles
- Communications – cell phone, Blue Tooth, GPS, digital cameras, MP3 players
- Solar
- Military
- Mining
The company markets its products in southeast Asia, primarily in China, Taiwan, and Japan. Additionally, it has various joint ventures with other companies to market its products in other areas.
What’s so special about rechargeable batteries? As many of you no doubt know, battery technology is currently the hold-up to widespread production of EVs. Current batteries are mostly to all (depends upon what source one reads and believes) too expensive, have safety issues (potential for overheating), and take too long to charge. Lithium-ion (LI) batteries are the batteries du jour — replacing the former battery technology king, lead-acid batteries. Advanced Battery Tech’s batteries are polymer- (not liquid-) based, and have lithium cobalt oxide anodes. These two differences help PLI batteries overcome many of the shortcomings associated with other types of rechargeable batteries. The company has 7 Chinese patents and received a U.S. patent on the technology in February 2006.
Additionally, the company has received a patent in China for its nano (as in “nanotech” — extremely small) material battery technology, and its U.S. counterpart patent application is pending. This nano-tech battery technology is something to watch.
Among others, the company has a business relationship with ZAP, a California-based EV manufacturer that was just in the news yesterday as it opened its new and much larger-than-existing manufacturing facility. ZAP has the exclusive rights to distribute American Battery Tech’s portable batteries in the U.S. Tim Plaehn, of this site, wrote a piece on ZAP today — click here to read.
The Chinese (Asian, for that matter) auto market is vastly different from the U.S. market — and it appears to me that those differences could benefit American Battery Tech. Most Chinese people don’t own vehicles (but the auto market is scorching — through July 2007, auto sales in China were up about 24% over the same period in 2006), so even a vehicle with some what we’d call “limitations” will be a huge step up for many. Most Americans own (or lease) their own vehicle and — in my opinion — are not going to adopt (at least not in any significant number) any vehicle that has limitations that their current vehicle(s) doesn’t (don’t) have — namely, for EVs, size, speed and range.
Additionally, the Chinese government is under pressure to address the horrendous air pollution in Beijing and other major cities. I question whether the Olympic Committee should have selected Beijing as the site for the 2008 Summer Games. Not only will the air pollution likely negatively affect some athletes’ performances, the no-Olympics-until-you-clean-up-your-air card has now been lost. Regardless, the Chinese are under international pressure — and that could very well help EV manufacturers and those companies, such as American Battery Tech, who make integral components for EVs.
This is not a recommendation to purchase this or any other security.
