(Update Oct-01-2009) Sold all CBAK shares today. I don’t want to hold it in this market. Took a small profit (about 3.5%).
(Original) Some background
As of Sept 28, the big brother BYD market cap HKD 140.9 b = USD 18.18 b; annual revenue RMB 26.788 b (Google finance HK: 1211)
the little brother China BAK Battery (Nasdaq:CBAK) has market cap of USD 242.3 m; annual revenue USD 245.35. More information on CBAK can also be seen at Yahoo Finance.
Note: BYD makes car and fabricate cell phones in addition to its battery busniess. So this is not compare apple to apple exactly. I believe BYD is better positioned and has first mover advantage. But stock-wise CBAK could be a better value.
1) For BYD, money made from car/cell phone fab, and netbook/cell phone battery business are used to subsidize R&D in car battery. BAK uses money made from cell phone/netbook only to subsize the car battery;
2) Primary market for BYD’s battery is international brand (from Motorola to VW), in other words BYD appears got both a brand and the addressable/profitable market. On the other hand, CBAK serves after-market or repair space, not as big and profitable as BYD;
3) CBAK makes both component (battery cell) and battery, in order to make money in component business one needs to be like Intel (scale and technology). In this aspect, CBAK is not in the better position as BYD because CBAK supplies cell to other battery makers, while BYD makes battery.
Some positives about CBAK
(quote its Investor Presentation, they only got link from Chinese web page. Maybe they can hire someone to polish up the English IR web page?). The content is in English (European Roadshow August 2009):
*Established leader in Li-ion mobile batteries, a strong newcomer in notebook batteries
*Upstart in power cells for electric cars and bikes
*Strong performance amid economic recession
*Shipment started to a Tier 1 OEM notebook customer
My comments:
1) It appears they are not real good at presentation and selling. Only 10 pages real content in Power Point. Boy, they looks like real engineers to me 🙂
2) They are making money from cell phone batteries, and started making money from notebook and netbook batteries. Meanwhile, they are putting money into R&D of the car batteries (all batteries based on same lithium technology).
Appendix:
Chinese article 3 years ago
Also
CBAK:BYD = Newegg:Amazon
(CBAK comes after BYD, just like Newegg comes after Amazon)
Sold all remaining Emdeon (NYSE:EM) today. Added some BBI, in anticipation of tomorrow’s investor conference call.
9/29/2009 1:11:43 PM ET EM SELL 100 EM @ $16.1 Completed Executed
9/29/2009 1:06:02 PM ET EM SELL 100 EM @ $16.1 Completed Executed
9/29/2009 1:03:55 PM ET BBI BUY 500 BBI @ $1.18 Completed Executed
9/29/2009 1:03:55 PM ET BBI BUY 1000 BBI @ $1.1795 Completed Executed