highpower technology: easy 30% upside as lithium-ion battery demand set to go parabolic

by:CTECHi     2020-01-25
High power technology (NASDAQ:HPJ)
Developers, manufacturers and marketers of nickelmetal hydride (Ni-MH)and lithium-
Ion rechargeable battery located in Shenzhen, China.
The company\'s rechargeable batteries are widely used in applications such as mobile devices, computer tablets, electric bicycles, energy storage systems, electric tools and electric vehicles.
As early as 13 years in October 20, I published my first article. HPJ, haupeng technology: battery manufacturers charged up to double in 2014. After discovering that the stock price rose sharply, the volume of transactions soared.
In the 6 months since my first post, the stock did do this: doubled.
This morning, the company announced the excellent fourth quarter and the complete
Revenue growth in 2013 due to the growth of rechargeable lithium
Ion battery business
Due to the revenue for the fourth quarter and several other bullish catalysts described below, I raised my initial 12-
A monthly price target of $5 to $6. 40 in 2014.
28% higher than the current price.
~ It was $5 when I wrote this).
If the share price reaches $6.
40 in 2014, starting today, this will be about 37% growth per year.
In my original article, I summed up my opinion on HPJ: in fact, the company reached my 12-
The $5 price target was achieved in just six months.
Ironically, 52-The weekly high of $6.
40 is my new price target of 2014.
I started with speculative buying, and because of its small market value, I added a \"speculative\" adjective (
Less than $100 million)
, The overall risk profile of small companies based in China, and the potential start
Risks associated with the company\'s new advanced and automated state-of-the-
Art Factory.
Since then, however, earnings have grown faster than expected, as have share prices.
This, combined with the company\'s first large recently announced
Battery orders for electric vehicles of scale (
I introduced this in this article)
, Causing me to abandon the \"speculative\" section of the rating and to strongly purchase high power technology in my last article on the company.
Fourth quarter earnings outstanding performance.
Net income was $0. 09/share -up 125% YOY.
This breaks the fourth quarter estimate I made in my first post ($0. 04/share).
Throughout the year, the company not only achieved a stable profit, but also achieved net income of $0. 11/share.
Net sales increased by 24. 7% to $38.
Compared with 2013, it was 4 million per cent in 2012.
Net sales for the whole year increased by 17. 9% YOY to $132. 8 million.
The best news is that the company is in lithium-
Sales of ion batteries continue: In addition, gross profit margin is also expanding.
Gross profit margin is 22.
The fourth quarter was 5%, up 170 basis points from 2012, up 390 basis points in a row.
As the number increases in the new automation state, profit margins may continue to increaseof-the-
The art manufacturing factory should be particularly strong in 2015.
Chairman and CEO George Pan commented on the results: he went on to point out the growth of several key terminal markets --
Mobile and portable devices and electric vehicles
There are no signs of slowing down.
Sun Henry, chief financial officer at Gao Power, said the company achieved strong revenue growth, healthy gross profit margin, improved management efficiency and profitabilityyear 2013.
He believes that these trends will continue: the completion of new manufacturing facilities means that 2014 of capital expenditure will be lower than fiscal 2013.
As a result, operating expenses as a percentage of sales are expected to decrease in fiscal 2014.
Battery Recycling-
CEO Pan discussed HPJ\'s pioneering efforts in the field of battery recycling and reported that a new recycling facility is scheduled to go live in the second quarter.
Mr. Pan said that some of the existing big customers, as well as potential customers, were attracted by the company\'s recycling program, which he said was a key advantage in winning more business in the future.
From a business and environmental point of view, the trend of battery recycling makes sense.
Pan predicts that more and more complex energy storage systems and electric vehicle batteries will need to be handled in the coming years.
During the conference call, HPJ reported an independent market study predicting that the battery recovery market could reach $2 billion by 2022.
More conference highlights of the Q4 conference call include: global lithium-
According to British-based independent analyst Roskill, demand for electric vehicles will be parabolic in the coming years: except for Wells
Public growth of rechargeable lithium
Demand for ion batteries from electric car manufacturers such as TeslaNASDAQ:TSLA)
Alex Walsh, CEO of Lithium Exploration Group (OTCPK:LEXG), says back-
The increase in wind and solar energy will also boost global demand for lithiumion batteries.
According to a recent market report from transparent market research, lithium-
In 2019, the ion battery market is expected to reach $33 billion, up from $11.
The compound growth rate in 2012 was 7 billion per cent. 4%.
In order to take advantage of the explosive growth of the lithium battery market, high power is in a good position.
Not only because it has new manufacturing capabilities, it is easy to absorb the increasing volume, but also because HPJ is a technology leader in the battery field. High tech-
As a leader in battery technology, it\'s amazing to see HPJ as a technology leader in lithium
Space for ion batteries
The company has more than 100 patents related to battery technology and manufacturing.
Many of these patents are related to the traditional \"old-fashioned\" Ni-
Battery technology.
However, this is a very profitable business for HPJ, so it is very profitable for Ni-
MH technology is very important.
Looking forward to the future, the company\'s patents in the field of lithium batteries will be more and more valuable.
In particular, patents 52, 57, 58 and 61 are unique to lithium battery technology.
In addition, it should be noted that the company plans to continue healthy financing (
4% of annual sales
Focus on R & D efforts in intellectual property.
Mr. HighPower\'s chief scientist for lithium batteries.
Peter Cheng delivered a speech on advanced lithium battery technology and development on March 11, 2014.
While I was unable to get a copy of the presentation, The HPJ staff was impressed by the presentation at such a famous meeting. Mr.
Cheng has more than 10 years of experience in lithium battery technology, from material research to battery application development.
Before joining Gao Dian, Cheng was the research director of one of China\'s largest lithium battery companies.
He guided the application project with customers including Apple (NASDAQ:AAPL), Motorola (NYSE:MSI), Samsung (OTC:SSNLF), and Nokia (NYSE:NOK).
In addition, it is important to note that the focus of the HPJ is safety and to join the UL\'s standard technical team (\"STP\")1642 in 2013.
The consensus agency develops and maintains UL product safety standards for household and commercial batteries.
Mr. HighPower\'s chief technology officer.
Li Wenliang said that HPJ is one of the few global battery manufacturers among ul stp 1642 members.
2014 guide at the conference call in the fourth quarter, the company announced the 2014 guide: I was actually able to call to ask a question.
The company told me about the new facility (phase 1)
There will be approximately $40 million in total capacity in 2015.
In response to a later question, HPJ reported that the new campus had additional space and they planned two additional development phases as per the requirements of the volume.
Summary and conclusion hpj has several strong catalysts for the future.
In previous articles, I reported some of them, including: in these catalysts, I can now add the company\'s outstanding 2013 Q4 sales and revenue, well above my estimate.
This is a good sign of entering fiscal 2014.
A new catalyst is the company\'s growing presence in the battery recycling market --
A new recycling facility is scheduled to go online in the second quarter.
In addition, another catalyst is the company\'s comment on the 2014 cap-
Ex will drop 50% (or more)
Compared with fiscal 2013.
From stock price angle see HPJ 2014 Money annual income guidance of midpoint ($160 million)
Will be 20% higher than 2013.
However, net income is expected to grow faster.
The midpoint of the HPJ 2014 net income guidance is $4.
5 million, up 300% from 2013.
According to the number of shares issued in the current period (
Fully diluted 13,874,574)
This is equivalent to $0. 32/share.
There is a very reasonable P/E = 20 on these revenues and HPJ is $6. 40 stock.
At the high end of the earnings guidance, P/E = 20 equals $7.
20/share price.
Like my previous $5 12
The monthly price target, believe my current $6.
The 40/share price target is fairly conservative for two reasons: however, who would complain if the stock only rose to $6. 40 in 2014?
This will be about 37% of its current annualized earnings.
HPJ is a strong buyer.
I will draw the table below from the results of HPJ for the fourth quarter and the full year of 2013.
Disclosure: I am long HPJ.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock 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 have not yet been independently verified.
Therefore, the author cannot guarantee its 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!
Editor\'s note: This article covers one or more microcap stocks.
Please note the risks associated with these stocks.
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