The China-based electric energy solutions provider, CBAK Energy Technology Inc. (CBAT) has been capitalizing on the EV Boom-led soaring Lithium demand.
Not only lithium demand but lithium prices are also rallying amid the EV boom as concerns about climate change and global warming grow further. More and more governments are taking action to accelerate their economy’s transition into clean and green energy transport. Most countries have even adopted plans for achieving net-zero carbon emissions by 2035 or 2050. The global EV adaption is soaring demand for lithium-ion batteries while also peaking lithium prices. Therefore, the demand for lithium is only growing and is expected to continue building further in 2022 and ahead. This creates a huge market opportunity for companies like CBAK.
The lithium-ion battery manufacturer reported its Q1 2022 earnings today, on May 19, 2022. With a humungous three-digit percentage growth in its revenues and gross profit, the company has proven its position in the growing market.
Following the earnings release, CBAT stock was rallying in the premarket and had added 8.41% at the last check. At the time of writing, the stock was trading at a price of $1.16 per share while the volume was a mammoth 5.2 million shares. Seemingly, investors are overjoyed with the company’s performance as the enormous 5.2 million shares volume comes against the average of just 933.77K.
CBAT’s Q1 Performance
For the March quarter of 2022, CBAT demonstrated explosive growth in its net revenues which are up a mammoth 752% YOY. The net revenues were $80.02 million in the quarter against the comparable $9.4 million last year. Contributing to the stark increase in revenues was its recent acquisition of Hitrans on top of strong sales of its high-power lithium batteries.
Also showing a three-digit percentage growth was the quarterly gross profit at a YOY increase of 189%. Thus, the gross profit increased from $1.8 million a year ago to $5.3 million in Q1 2022. However, soaring raw material costs had the gross margin shrink to 6.6% against 19.5% a year ago.
The increasing raw material costs, growing headcount, and consolidation of Hitrans resulted in operating expenses widening by 256% YOY. Hence, the quarterly operating expenses totaled $6.7 million while the operating loss was $1.3 million.
Furthermore, net income for the quarter was $0.4 million or $0.01 on a basic and diluted share basis. CBAT ended the quarter with cash and cash equivalents of $5.6 million on March 31, 2022.
Not just the Earnings
Stake in Hitrans
The exponential growth in CBAT’s sales isn’t the only factor suggesting its solid position in the growing market. Capitalizing on the growing demand, the company has even acquired a major stake in a leading lithium-ion battery materials supplier, Hitrans. The company’s subsidiary now owns an 81.56% stake in Hitrans Lithium Battery Technology Co. With an annual production capacity of 12,000 tons of NCM precursors and 8,000 tons of cathode materials, Hitrans has plans in action to raise both to 50,000 tons by 2023. This brings a huge competitive advantage to CBAT in the rising competition in the lithium market as it will help the company cope with supply chain constraints.
Collaboration for Hydrogen Fuel Cells
While the lithium-ion battery market is huge and is bound to skyrocket due to the ongoing EV adoption, CBAT is also trying its hands at fuel cells too. In March, the company said to have signed an MOU with a “leading European hydrogen energy group with 100 years of operation history”. The unnamed company, according to CBAT, was created in 1902 and has over 60,000 employees. While the huge company remains unnamed and slightly questionable, the collaboration will help promote the development of hydrogen fuel cells. The company has high hopes that this partnership will allow it to tap into the increasing interest of the Chinese government in the development of hydrogen fuel cells for the automobile industry.
Huge Battery Order
On top of it, the company received a $29 million battery order from its European customer. The customer is a leading provider of heating, cooling, and renewable energy systems with billions of euros in annual sales and a global presence. The order encompasses roughly 13.9 million units of batteries for the customer. In 2022 alone, the company is expected to deliver 9.9 million units of batteries worth EUR 17.1 million approximately.
With its stake in Hitrans and collaboration with a leading Hydrogen energy group, CBAT has been solidifying its position in the market fueled by the EV boom. In addition to its lithium-ion batteries, the company is even working on hydrogen fuel cells for the automobile market.