chinese ev battery market just another bullish catalyst for extremely undervalued highpower technology
Is a clean energy company focusing on the development, manufacture and marketing of nickelmetal hydride (Ni-MH)and lithium-ion (Li-Ion)
Rechargeable batteries and related products for consumer and industrial applications.
The company\'s new recycling center enables it to re-process raw materials from used batteries for reuse in new battery production.
Several recent press releases are a catalyst for great optimism in the future. Case-in-
Point: power announced its 20Ah lithium yesterday
Ion battery products (
Approved by China National bus quality control and inspection center. Mr.
Li Wenliang, chief technology officer at Power power Power, said: the bullish news was after the announcement of HPJ\'s first major contract ever in February.
Ion batteries for hybrid power in China (\"HEV\")and plug-in hybrid (\"PHEV\")electric buses.
It is estimated that HPJ 16 am p-96 will be used for each hybrid vehiclehour (\"Ah\")
Each PHEV bus will use 288 of the company\'s 20 Ah battery.
Gao Li expects that the company\'s sales in Huizhou Yipeng will be 4-
The fiscal year 2014 was $5 million.
The Chinese market for electric cars and PHEV buses is crucial for China\'s future.
According to a recent McKinsey report, if China reaches U. S. car penetration, then China\'s oil demand will exceed global oil production. Another driver driving China\'s adoption of electric vehicles is that social unrest has intensified as air quality is very poor in many major cities in China.
Despite this demand, McKinsey notes that China is slow to adopt electric vehicles.
The reasons cited are the lack of qualified battery suppliers, the high cost of electric vehicles and the lack of support infrastructure.
The analysis shows that the first users of electric vehicles are likely to be public fleets.
Especially the bus fleet.
As the world\'s largest bus manufacturer, Chinese car OEMs can meet large commercial orders by quickly reaching the manufacturing scale, thus reducing the cost of electric vehicles.
The bus can also solve the current limitation of the battery life of the electric vehicle by providing additional space to store the spare battery capacity.
The city bus runs a fixed route and usually provides services and maintenance in the central garage.
Therefore, the bus fleet greatly facilitates the battery charging and replacement.
McKinsey also pointed out that government subsidies and incentives have proved more effective in stimulating public fleets to buy electric vehicles than in stimulating consumer demand.
The report cited the \"ten cities and thousands of vehicles plan\" that the Chinese government began to implement in 2009, with the goal of implementing the \"new energy vehicle plan\" in 25 cities \".
The plan includes city buses, taxis, government fleets and other public service vehicles under which electric vehicles are eligible for special subsidies.
McKinsey said that if these projects continue, the current trend will continue, and the total number of electric buses may grow to 100,000 by 2016.
According to a press release issued earlier by HPJ, each PHEV bus uses 288 of the 20 Ah battery, and the market potential of China\'s electric buses will reach 10 or 100 of millions of large formatted lithium
HPJ has just been approved for shipment of ion batteries by government regulators.
Electric vehicles are just another bullish development, and the certification of large-format lithium
Ion batteries are certainly a very positive development for the Chinese electric vehicle market, and this is by no means the only bullish catalyst for this year: so what we\'re seeing here is a very high --
From small to small, the market for rechargeable batteries is active
Extend the battery in TIMEX and Sony wireless devices to the power supply of solar lighting products to the 10 KW mAh ESS system
20 Ah lithium battery-
Ion batteries for hybrid and PHEV markets.
High power will definitely hit the entire Li-
It is important to note that Li-
Compared with the traditional Ni of HPJ, ion batteryMH market.
I wouldn\'t be surprised if it was all year round
Performance at the end of the 2014 fiscal year, Li-
Ion battery compared to NiMH batteries.
From the most recent earnings report, we can see that
Ion battery sales in the first 6 years
In the months of 2014, it grew to $30.
9 million from $21. 6 in 2013 (+43% yoy).
By contrast, low profit Ni-
HM sales are relatively stable: in terms of net income, the financial position although the results for the first and second quarters are slightly lower than I expected (-$0. 07 and +$0.
05 per share, respectively), lithium-
Ion battery sales and revenue are very strong: The highlight of the second quarter Seeking Alpha call minutes: sales in the HPJ new material business unit increased by 49. 5% in Q2 to $1.
5 million with the start of the company\'s new recycling business.
Gross profit margin increased to 20 in the second quarter. 3% from 18.
2013 the same period 4%.
EBITDA grew by 124 in the second quarter ended June 30, 2014. 6% yoy to $2. 4 million.
The company expects the first existing production line at the Huizhou plant to be fully expanded by the end of the year.
The profit margin of the new plant is only 10%, as HJP is still increasing production and businesses need to absorb all fixed investment costs in the first year.
However, Henry Sun, the company\'s chief financial officer, said he expected gross profit margin to \"increase significantly\" in 2015 \".
The combination of full production line capacity utilization and the resulting higher profits is a very positive catalyst for moving forward.
The financial report shown below is taken from the company\'s second quarter 10-
Q. Documents covering the first half of fiscal 2014: In the first half of the year, total operating expenses increased by 27% and revenue decreased.
However, the increase in operating expenses is mainly due to the following factors: all of these expenditures are carefully and reasonably invested, which will enable HPJ to develop its business.
Therefore, despite some disappointing profits, HPJ has performed very well, infiltrating new markets and increasing revenue and market share.
In addition, it should be noted that we will enter 2nd-
For HPJ, tradition is much stronger than in the first half.
The company reiterated in its second-quarter earnings report
Guidance of the year: the midpoint of these full-
The year range is inferred to be $92.
7 million half revenue 2nd (
By contrast, $67.
First half of 3 million), and $0.
16/full share-Annual net income.
Shares rose 10% due to bullish electric vehicle battery news yesterday.
Volume expanded to 1.
Compared with the average trading volume of 94 million shares, 283,723 shares-a massive 6.
8 times more volume.
According to The HPJ page of The Wall Street Journal, institutional ownership increased significantly as of June 30, 2014: there were only 14 in total.
4 million fully diluted shares issued at the end of the second quarter
The above-mentioned five institutions have 837,837 shares or five.
8% of the company
More importantly, this is about 9.
4% of the public number.
Other key financial indicators reported by WSJ are shown on the left. The $0.
12/share TTM earnings are favorable compared with $0.
16 estimate the midpoint of earnings per share from the company\'s full earnings per shareyear guidance.
Most of the short-term interest reported by The Wall Street Journal (3. 57% of float)
Yesterday, in the course of yesterday\'s sharp rise in share prices, the frightened bears covered up their wrong bets because of the sharp increase in volume.
From a valuation point of view, the high TTM p/e ratio may cause some investors to worry.
However, in the case of high power, the ttm p/E ratio is not necessarily a good measure of the company\'s valuation.
As reported in my article, the company has made many
Time investment to gain market share of the rapidly growing lithium
Market for ion rechargeable batteries
The company has invested heavily in equipment and personnel to add a new state --of-the-
Sales and marketing staff have been added to expand market penetration.
Perhaps most importantly, the company has increased spending on strategic R & D initiatives to develop product solutions from small to large
Market size for rechargeable batteries.
Looking through the list of recent press releases previously reported, the company apparently benefited from the investments made to develop its business.
The shares are currently returning some of yesterday\'s gains at about $6. 25 per share.
Annual earnings are $0.
16/copy, one year can be inferred-
At the current price, P/E = 39 ends.
However, as I mentioned earlier, I don\'t think the P/E ratio is a good indicator of the stock\'s potential.
I prefer to see the market value.
HPJ currently has a market capitalization of less than $100 million.
However, the company is in a good position in cash --
Tens of millions to hundreds of millions of large electric vehicles in China\'s domestic electric vehicles, hybrid vehicles and PHEV bus market
I. Expanding the demand for lithium batteriese.
Potential sales amount to billions of dollars.
The bus market will only supplement the existing small and medium-sized Ni-MH and Li-
Ion battery sales in energy storage systems, mobile devices, wearables, industrial and solar markets.
Still, the potential for the hybrid and PHEV markets is huge: We don\'t know the details of the contract for Sony, TIMEX or the bus manufacturer.
However, with sales and profit growth, it is not impossible for HPJ to double Net income in 2015.
If the company wants a few big companies
The size of the battery contract for electric vehicles, net income may double.
At the same time, pay attention to $0.
The estimated net income per share of 2014 will increase by 45% over $0.
11/copy released last year.
The big risk of risk entering 2014 is the potential start.
Ask questions at the new manufacturing facility.
However, two small wins-and large-scale Li-
The ion rechargeable battery contract reported earlier, in addition to obtaining regulatory approval for the hybrid car/PHEV market, concerns about new manufacturing facilities have been greatly eased.
Competition is always risky,
In the first and second quarters, sales of ion batteries increased by more than 40%.
At present, the biggest risk facing HPJ is valuation.
However, if the company is able to maintain growing sales and profit margins in the current situation, it should continue to guarantee that the valuation is higher than the overall market.
In fact, I expect the company to accelerate sales and revenue growth for 2nd of the first half of this year.
The third and fourth quarters were the strongest quarters for HPJ.
Abstract and conclusion si wrote my first article about HPJ when the stock was $2 in last October. 58.
On a P/E basis, the stock was of high value at the time, but it has risen 142% since then.
I expect this trend to not only continue but accelerate.
That is, due to the high growth potential of the company, the company will continue to receive a return on the high P/E ratio, and the stock will continue to appreciate when implementing the it business plan that promotes growth.
In my original article, I noticed some positive catalysts: the volume of transactions increased, very large (and growing)lithium-
Ion charging battery market, and the new state of the company-of-
All these trends are solid and continue to be a catalyst today.
Now, we can increase the huge potential of China\'s electric vehicles, hybrid vehicles and PHEV domestic bus market in HPJ\'s vision.
With respected customers such as Sony, Phillips and Costco already in the bag, HPJ will continue to maintain strong market performance in various fieldsscale (
Wearable and mobile devices)to large-scale (
ESS and EV/PHEV)
Institutional ownership is also increasing as revenue potential increases.
But net recently
Revenue results are not the best way to evaluate high power technologies.
While the company\'s profits are strong and should publish better bottom line figures for fiscal 2nd and a half, 2014, investors should be aware that spending on R & D, factories and equipment has increased significantly in recent quarters, and people take market share in fast-growing lithium
Ion Battery market
It\'s wise for investors to see the past.
Long-term bottom line figures, look at the long-term
Term potential of HPJ lithium
Market share. HPJ posted Li-
Ion battery sales in the first and second quarters increased by more than 40%.
In addition, with the increase in battery sales, the mixing ratio of large batteries is also getting higher and higher.
With the improvement of manufacturing efficiency and capacity utilization, large-scale battery solutions will lead to the expansion of gross profit margin and net profit margin.
I reiterate my previous $2014 PT 8.
40, and launched the target of $2015. 50.
Based on 14.
At the end of the second quarter, 4 million shares were issued, with a price target of $11 for 2015.
50. The market value of the company is only $0. 165 billion.
This is in the face of lithium-
The ion battery market is worth more than a billion dollars.
HPJ has a good share in this market.
The company is clearly highly respected by the Chinese government, as evidenced by government funding and the support of large enterprisesscale Li-
Ion battery certification.
A year of heroic-to-
The latest financial results and press releases reinforce my first post that HPJ is a long term
More potential termsbagger.
According to the current market value, with the overall rechargeable Li-
A high-growth market of more than 40%.
HPJ is a strong buyer.
Technical analysis also note the bullish stock price chart shown below.
Last fall, stocks broke out shortly after my first article was published.
It made less than $3.
It made another leg.
Rose in February and once again consolidated the base below $5.
At this point, the volume is almost exhausted.
Sales of the TIMEX announcement soared, driving the stock to quickly and steadily exceed $5.
Yesterday\'s bullish press conference raised the stock by more than $6.
60, the daily turnover increased by 600% +.
This is a very bullish chart.
At present, after the big move of $6 yesterday, the stock fell by only one percentage point. 38.
Disclosure: The author is long HPJ.
The author wrote this article himself and expressed his views.
The author was not compensated (
In addition to Seeking Alpha).
The author has no business relationship with any company mentioned in this article.
Supplementary disclosure: I am an engineer, not a CFA.
The information and data provided in this article are obtained from company documents and/or sources that are considered reliable, but are not independently verified.
Therefore, the authors cannot guarantee their accuracy.
Please study on your own and contact a qualified investment consultant.
I\'m not responsible for the investment decision you made.
Thanks for reading, good luck!
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