CBAK Energy Technology (CBAT) Q3 Earnings call transcript Nov 12, 2024

CBAK Energy Technology Inc., a leading battery manufacturer, reported a net revenue decline of $33.5 million in the third quarter of 2024 for its battery business. However, the company's overall revenue in the first 9 months of 2024 reached $114 million, representing a significant year-on-year growth of 18.4 percentage. This performance is particularly noteworthy given the general pressure and downturn in the new energy industry.

Key Challenges and Strategic Focus

The decline in net revenue from the battery business in the third quarter was primarily due to a 1-month suspension of production at the Dalian facility in September. Despite this setback, the company's battery business remains focused on the energy storage market, with a year-on-year increase in revenue from light electric vehicles (LEVs), including 2-wheelers and 3-wheelers. This strategic focus on LEVs, particularly in the Southeast Asian market, is expected to contribute to a gradual increase in the revenue proportion of LEVs.

Financial Performance and Future Outlook

CBAK Energy Technology reported a gross profit margin of 34.3 percentage in the first 3 quarters of 2024, a significant increase compared to the same period in 2023. The company's battery business achieved a net profit of $2.04 million in the third quarter, marking the third consecutive quarter of net profit. Despite the challenges faced by the industry, CBAK Energy Technology's strong financial performance underscores its resilience and adaptability.

Expansion and Innovation

The company is also making strides in expanding its capacity and product portfolio. The Nanjing factory, which started operations in late 2021, has become profitable ahead of schedule, and CBAK Energy Technology plans to add a new production line to increase capacity for its new model 40135 large cylindrical battery. Additionally, the successful development and mass production of the tablet model 26650 cylindrical battery, with a 25C discharge rate and rapid charging capabilities, positions CBAK Energy Technology as a key player in the market.

Looking Ahead

CBAK Energy Technology is optimistic about its future prospects, with a focus on expanding its capacity and exploring new markets. The company's strategic focus on LEVs, particularly in Southeast Asia, and its efforts to establish overseas factories in response to client demand, highlight its commitment to innovation and growth. The challenges faced in the third quarter notwithstanding, CBAK Energy Technology's robust financial performance and strategic initiatives position it well for continued success in the battery market.