This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

China Digital Trades at Discount

As a result ABAT has cash of $45 million and no debt. In terms of expansion on the battery side, ABAT has just announced that it in the process of acquiring "a leading battery production company in Shenzhen, China." ABAT put down a deposit of RMB10 million ($1.5 million), meaning that its target is likely a smaller battery producer. I find this to be an encouraging data point for my valuation of CMTP.

HPJ is a great comp for CMTP because it is also a Shenzhen-based battery manufacturer, which happens to be located just five minutes away from CMTP's headquarters and factory. HPJ is currently trading at less than two times cash, but is trading on a cash adjusted P/E of about seven times. This is more than triple the multiple of CMTP's current price.

Battery production line

It is worth noting that HPJ has enjoyed a jump in its stock price of nearly 30% following the company's attendance at the Rodman and Renshaw conference in New York where it presented its story and gave one-on-one meetings with institutional investors. I expect CMTP may enjoy an even greater boost in stock price once it gains any meaningful institutional following.

I like CMTP because it is very profitable, expanding, debt-free and cash rich. At the current price of $4, the company trades at a cash-adjusted P/E ratio of only two times TTM earnings (compared to 10 times for ABAT, and losses for CBAK).

HPJ trades at a P/E of 13 times, or roughly seven times once its substantial cash balance is backed out. According to its recent 10-Q, China Digital had nearly $10 million of cash on its books at quarter-end. The company has completely changed from its low-margin business of manufacturing battery shells and caps for lithium ion batteries.

2 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ABAT $0.32 0.00%
CBAK $4.60 0.00%
HPJ $4.33 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs