Boston, MA 03/03/2014 (wallstreetpr) – China BAK Battery Inc. (NASDAQ:CBAK)’s stock has seen some spectacular gains recently. In fact battery companies are having a very good run in the stock markets recently, probably on account of news that Tesla Motors Inc (NASDAQ:TSLA) was planning a gigafactory for batteries.
The Tesla Rumors:
First of all, there is a lot of difference between batteries manufactured by China BAK Battery Inc. (NASDAQ:CBAK) and those required by Tesla Motors. China BAK manufactures lithium-based batteries. These battery cells are used in mobiles and smartphones. As such the market for such batteries is also growing on account of demand for smartphones and tablets. China BAK manufactures battery cells which are used as components of rechargeable batteries. Tesla also requires rechargeable batteries but they are of a different kind. Tesla is, in fact, planning on a mega factory to fulfill its demand and expects to begin production by 2017. The factory is said to have a capacity equal to the total global production of all manufacturers put together in 2013.
In fact, once the factory opens, many small manufacturers may experience a lot of trouble in selling their products as Tesla will be able to compete with them on the price front.
Financial Performance:
Investors also need to be worried about the financial performance of China BAK Battery Inc. (NASDAQ:CBAK). The company has seen erosion in earnings per share in the last two years. During the last fiscal, the company reported losses of $9.18 per share against loss of $5.20 for the prior year. The net operating cash flow has decreased by more than 170% as compared to the same quarter last year. The company reported net operating cash flow of a negative $19.53 million for the last quarter. The net income has also declined to -$57.90 million in the last quarter against -$20.76 million for the same period last year. The growth rate of the company is also significantly lower than its peers.
Though China BAK Battery Inc. (NASDAQ:CBAK)’s industry segment is growing, the company is finding it difficult to compete. Investors should study the financials very carefully before investing.
