VLNC: Valence Technology, Inc.(fka VLNCQ)

[mrholty]

Fin-

Thanks for the document. I will agree with you that JCI has a need for a patent portfolio. They already have idle mfg space for Li battery production in that they have a barely used factory in Michigan from their failed JV with SAFT. Their SAFT JV failed as SAFT after teaming with JCI for automotive then built another factory and HQ in Florida for stationary applications. JCI cancelled the JV keeping the plant which I believe is running at less than 30% capacity.

Here is JCI investors day presentation. Battery industry starts on page 81.
http://www.johnsoncontrols.com/content/dam/WWW/jci/corporate/investors/2012/JCI%202013%20Outlook%20and%20Strategic%20Review.pdf

The key slide in this is page 88 where they admit they have white space or basically no product. They admit they needs something beyond the Stop/Start market with their AGM batteries (which actually isn't optimal either as they fail too quickly) and some of the more expensive LiOn chemistries. JCI has proposed the 12/48V system in one battery case but there is concerns about having two battery chemistries together. Valence's safer battery would be a good story here.

The head of the Power Division (batteries) is Alex Molinari and is by far the smallest of the 3 divisions at JCI at $5B in sales vs $14 and 21B respectively in automotive (interiors/seating) and building controls. Yet Alex is basically being groomed to be the next chairman becoming Vice Chairman in Jan.
http://www.jsonline.com/business/johnson-controls-promotes-alex-molinaroli-to-vice-chairman-5o8glvo-188206501.html

FD: No position at this time.