I am a pediatrician (posting under my wife's google acount as I have
none of my own) and I use kid analogies. Ever see little kids play
soccer? The herd all chasing where the ball IS, even though it is no
longer there when they get there? And the one kid with the smarts to
calmly position himself where the ball is going to be?
CBAK is where the ball is heading. Now we wait for it to come to them.
I was not as prescient as you to sell after the private offering but I
am right now hoping that it drops a bit further again - I am very
confident in this company's three to five year outlook and will sell
off many other favorites to buy up more if this drops to under $2.25.
Even more so I am very sure that in short order (a few months) this
will get back to its comfortable trading range of $3 to 4.
Of course I am operating under a few assumptions. The first is that
Lithium battery powered EVs will have significant growth within China
in particular over the next 5 to 10 years. If that assumption is wrong
then my bet loses me a large share of my funds.
If that assumption pans out however then CBAK remains the best play in
town.
China has the resources for lithium batteries - from the lithium to
the rare earths. There is no way that China is going to build a
domestic EV market, well really underwrite it, without being sure that
the batteries are made there. And CBAK has the capacity, the
experience, the quality control, and the expertise, to deliver the
required standardized quality products at the needed price points.
Assuming that you want to make the Chinese market lithium battery EV
play (and I say this as someone who has and continues to own others in
his basket) let us compare CBAK to the competition:
A123? Great backers but no major contracts. They may end up working
with Project Better Place. Chysler's program is for now dead in the
water. The SAIC manufacturing build out is something that may be able
to produce in 5 or so years but not immediately, and SAIC has majority
ownership. Marketing savvy they got, but that does not warrant that
kind of valuation. They may be saved by a few utility megabattery
contracts but no competition for the Chinese EV market at this point.
BYD? Yes SAIC will use them up until they have their own facility with
A123 running and they will try to sell their own. But I see no LOIs
with any other Chinese automakers in the offing. Handmade is a recipe
for increased costs as the Chinese standard of living rises and for
problems with standardized production. Long term cutting costs while
assuring quality means automated lines. Buffet had a great gut
reaction to their chairman and bet his gut. Enough follow him wherever
he goes that the stock has done quite well. But hey I hope his betting
on his gut reaction to a personality works better than it did for
McCain. In any case - is its future worth 20X CBAK's (as measured by
valuations)? I don't think so.
ABAT? They are not even ready to compete in this segment. e-bikes is
their niche and they are happy doing well there. They have some
speculative arrangements with ZAAP thanks to Lam, but they are no
competition for the full size EV market.
Lishen? Well as I've pointed out before the fact that Tianjin Electric
(partly owned by Tianjin Electric) has signed a LOI with CBAK tells us
something about Lishen's readiness to compete here.
Valance? They have an IP deal with Lishen that will make them
something and some of their own capacity. Maybe they'll get some share
on their own. A smallish market cap, slightly less than CBAK's right
now. But they won't be the go-to company. They don't have the capacity
on their own. Worth a small play yeah.
Meanwhile CBAK is setting up shop with Dongfeng (who will make the
Nissan Leaf for the Chinese market, and probably a few similar
vehicles under their own badge), Tianjin Electric (!?! - seriously,
how can that BE?!?), Brilliance (a longer term play for the minibus
market more than anything else), and maybe a few others that are
rumored.
I think that I'll have my sub $2.25 opportunity before year's end,
whether that last jump up was the Money article, or index balancing,
or market manipulators. And I am selling whatever I can part with to
double down then. To hell with a balanced portfolio at this point;
diversity be damned! And then I wait. Up or down, I wait. This always
has been a long term play ...
(If there is a merger I'd like to see, it would be with ALTI. They
have great IP but no ability to produce it cost effectively. Get that
and their potential utility megabattery business under the CBAK roof
where it can be made for less. When push comes to shove - and that is
likely within 3-5 years - what will sell the product aint marketing
savvy but quality for price.)
On Dec 21, 10:23 am, "jrgriffi...@gmail.com" <jrgriffi...@gmail.com>
wrote:
> This company reminds me of Amazon. A fabulous growth story.
> Remarkable top line growth. But bottom line results are terrible for
> years.
> This company stays alive by selling new shares at fire sale prices,
> only to see the shares drift below those prices.
> Then someone begins to tout the "need for new battery technology" and
> CBAKs name gets in the mix and speculators pump up the share price for
> a short time, then let it drift down again.
> When Tony Shen told the world that CBAK wouldn't be profitable for
> another two years, he punched a hole in the balloon and the share
> price began its current descent, with a recent temporary reinflation
> following Money magazine's recommendation as a "value" stock.
> The good news is that Amazon finally began to make money, and a lot of
> it. But only after the Kindle caught fire and became Amazon's hottest
> selling item. Will CBAK's lithium phosphate batteries become their
> Kindle, someday? I don't know. This is a case of "if you build it,
> they will come." But just who is going to come out of that tall
> cornfield to make CBAK's investment pay off?
> On Dec 18, 1:10 pm, Robyn <rkseid...@gmail.com> wrote:
> > As someone who has been invested in this company probably as long as
> > you have, I would not want to see it. CBAK would be undervalued.
> > Within five to ten years the fastest growth and biggest market will be
> > within China. The e-bike market and Dongfeng selling domestically
> > produced Nissan Leafs and others under their own brand and Tianjin
> > Electric, Brilliance, and others. There is ONE company that has the Li-
> > ion experience, manufacturing expertise and capacity to meet this
> > Chinese market demand. It isn't A123. Oh they will get something up
> > and running with SAIC but it won't be for years. And BYD's handmade
> > approach won't fly longterm. Of course A123 is not without its value
> > but in terms of potential a fair valuation for growth potential in
> > that timeframe would put their market caps reversed. But a merger/buy-
> > out now would not recognize that.
> > On Dec 18, 1:40 pm, "jrgriffi...@gmail.com" <jrgriffi...@gmail.com>
> > wrote:
> > > Now that AONE is a publicly-traded company with established contracts
> > > to supply GM with lithium phosphate batteries for over 20 different GM
> > > EVs and PHEVs, it seems to me that Mr. Li would be wise to explore a
> > > merger
> > > with AONE. Yes, once upon a time, AONE was a tiny start-up company
> > > that CBAK helped out by manufacturing its first high-energy lithium
> > > phosphate batteries. Then what looked like a wonderful partnership
> > > fell apart with very bad feelings on the part of CBAK. However, AONE
> > > has moved on, gone public, and has a $2 billion cap as opposed to
> > > CBAK's $160 million cap. More importantly, AONE has both GM contracts
> > > and patent rights to manufacture the high energy lithium phosphate
> > > batteries so important to future world-wide growth of the EV auto
> > > industry. Merge the two companies and you will have an instant
> > > powerhouse ready to conquer the lithium ion battery world. CBAK has
> > > the plant AONE needs to scale up and serve everyone who wants its
> > > battery technology in their PHEVs or EVs. CBAK is already familiar
> > > with the technology and would need only a short learning curve to
> > > fully ramp up. Turn CBAK shares into AONE shares and you now have a
> > > very pretty tulip bulb attractive to a large number of investors and
> > > speculators. Raising additional capital to grow the industry would be
> > > even easier than it was for AONE at the time of its IPO. The benefits
> > > of a merger are clear to me. CBAK would no longer need to sell its
> > > stock at a discount and in small amounts to private investors in order
> > > to raise capital. AONE would benefit from CBAKs existing markets,
> > > its state-of-the-art plants, and its many Chinese connections. China
> > > is the place where EVs and PHEVs will grow most rapidly. CBAK is
> > > prepared to help AONE achieve its goals more rapidly. AONE is ready
> > > to give CBAK the high profile and investor interest it requires to
> > > grow when the major inflection occurs in the growth curve.
> > > Tony, Mr. Li - lets get it done!
discussions
