Advanced Battery Tech (ABAT) Reports Mixed Results, But Shares Up

Advanced Battery Tech (ABAT) which has long been my favorite lithium battery play, reported Q3 earnings results last night that were mixed, but traders like the report, sending the stock up a few percent in pre-market trading.  The company reported an EPS of .16/share vs the analyst estimate for .12/share on revenues of $25.9 million which was just shy of the analyst estimate of $27.5 million.  Those numbers represent a 100% quarter over quarter jump in EPS and a 46% jump in revenues, so another strong quarter from ABAT, but I really expected more from this company.  I think traders are sending the stock up despite the revenue miss due to ABAT commenting it will increase capacity and pursue acquisitions to expand.  Margins are also improving as the company continues to cut costs following its acquisition of electric bike manufacturer Wuxi.  Gross margins jumped to 53% from 43% in the year ago quarter.

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Mr. Zhiguo Fu, CEO of ABAT, stated, “We are pleased to report an increase in our revenue attributable to medium and large capacity batteries and electric vehicles. This has been beneficial to the profitability of our overall business. The margins that we are able to achieve in selling larger capacity batteries are significantly greater than the margins we achieve in selling smaller capacity batteries. In order to meet higher demand from both battery and electric scooter markets, the company intends to accelerate growth by both adding more facilities and pursuing acquisition opportunities.”

Technically, shares of ABAT continue to look very bullish and our currently carving out a cup with handle base.  A breakout above the high of the handle at 4.17 would be considerably bullish for the stock.  It looks like it may do that today.

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