China BAK Battery, Inc. (CBAK)

[Ecomike]

CBAK reported earnings of $1.47/share the last quarter!!!! Talk about being way undervalued?

CBAK reported a reversal of a huge accounting based loss into a gain that was based on huge China government grant once the cash arrived in the last financial report, but I think I am the only one that noticed it. It made a huge positive change in stock holders equity that makes think CBAK is now way undervalued!!!!

Page F-2 shows a massive increase in stock holders equity due to the China gov grant they banked finally!!!

Total shareholders’ (deficit) equity Prior quarter(4,335,623 )

Latest quarter earnings!!! 12,915,298

That is a 17 million dollar increase in Stock holders equity!!!


Also current liabilities dropped by 30 million dollars!!!!

Operating expenses dropped 90%!!!!!!!!!!!!!!!!!!!!!!

Earnings per share was $1.37/share!!!

OS shares is only 12,704,597

Year to year they went from loosing 48 million dollars to earning 13 million in the last quarter!!!!!!!


Upon the commencement of commercial operations of our Dalian manufacturing facilities, which is expected to be in March 2015, we will be engaged in the business of developing, manufacturing and selling new energy high power lithium batteries, which are mainly used in the following applications:

Electric vehicles (“EV”), such as electric cars, electric buses, hybrid electric cars and buses;
Light electric vehicles (“LEV”), such as electric bicycles, electric motors, sight-seeing cars; and
Electric tools, energy storage, uninterruptible power supply, and other high power applications.

The construction of our Dalian facilities is nearly completed and we will commence the trial production in early March 2015.

We received most of the operating assets, including customers, employees, patents and technologies of our former subsidiary, BAK International (Tianjin) Ltd. (“BAK Tianjin”). Also, the assets were acquired in exchange for a reduction in receivables from former subsidiaries. We have outsourced and will continue to outsource our production to BAK Tianjin or other manufacturers until our Dalian manufacturing facility begins its commercial operations excepted in March 2015.

As of December 31, 2014, Dalian BAK Power has generated revenues of approximately $3.1 million from the sale of batteries manufactured by BAK Tianjin under outsourcing arrangements.

We had experienced net losses from continuing operations during the past two fiscal years. We generated revenues of $3.1 million and $41.2 million for the three months ended December 31, 2014 and 2013, respectively. We incurred a net loss of $5.3 million during the three months ended December 31, 2013. During the three months ended December 31, 2014, we recorded a net profit of $17.4 million, including a one-time government subsidy of $23.4 million to finance the projected operating loss incurred during the move and construction of our new facilities in Dalian. As of December 31, 2014, we had an accumulated deficit of $124.4 million and net assets of $12.9 million. We had a working capital deficiency and accumulated deficit from recurring net losses incurred for the current and prior years and significant short-term debt obligations maturing in less than one year as of December 31, 2014.

In October 2014, we received from Dalian government a subsidy of RMB46.2 million (approximately $7.4 million) for costs of land use rights relating to the new manufacturing site in Dalian. We also obtained a short term bank loan of RMB30 million (approximately $4.9 million) with a one-year term from Bank of Dandong in August 2014. The short term bank loan is bearing a fixed interest rate at 7.8% per annum and is guaranteed by Mr. Xiangqian Li, our CEO, and Shenzhen BAK Battery Co., Ltd., our former subsidiary (“Shenzhen BAK”). We plan to renew this loan upon maturity, and plan to raise additional funds in the future to meet our daily cash demands. In the meanwhile, due to the growing environmental pollution problem, the Chinese government is currently providing vigorous support to the new energy facilities and vehicles. It is expected that we will be able to secure more potential orders from the new energy market, especially from the electric car market. We believe with the significant reduction of liabilities and disposal of traditionally low margin battery business, supported by the future market demand in high power lithium ion products, we can continue as a going concern and return to profitability.

First Quarter Financial Performance Highlights

The following are some financial highlights for the first quarter of our fiscal year 2015:

Net revenues : Net revenues decreased by $38.1 million, or 92.5%, to $3.1 million for the three months ended December 31, 2014, from $41.2 million for the same period in 2013.

Gross profit : Gross profit was $0.4 million, representing a decrease of $2.2 million, or 84.6%, for the three months ended December 31, 2014, from $2.6 million for the same period in 2013.

Operating loss : Operating loss was $0.1 million for the three months ended December 31, 2014, reflecting an improvement of $2.6 million from an operating loss of $2.7 million for the same period in 2013.

Net profit (loss) from continuing operations : Net profit from continuing operations was $17.4 million for the three months ended December 31, 2014, representing an improvement of $29.4 million from a net loss from continuing operations of $6.1 million for the same period in 2013.

Income from discontinued operations : No income was generated from our discontinued operations for the three months ended December 31, 2014, compared to a net profit of $0.9 million for the same period in 2013.

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Fully diluted earnings (loss) per share : Fully diluted earnings per share was $1.37 for the three months ended December 31, 2014, as compared to fully diluted loss per share of $0.42 for the same period in 2013.