NEW YORK (
) -- Of lithium battery stocks that exhibited weak stock price performance in 2010, readers of
Advanced Battery Technologies
will most likely to stage a turnaround in 2011.
When given a choice between
and Advanced Battery Technologies, 52% of the votes went in favor of ABAT; 29% favored A123 and 19% were most hopeful about Ener1.
Although voter sentiment was lowest for Ener1, shares of the company experienced a major spike this week. On Tuesday,
, as it highlighted that it had signed a joint-venture agreement with China-based
Wanxiang Electric Vehicle
to produce lithium-ion cells and battery packs for the rapidly growing Chinese market.
"Ener1 has previously stated that they were on the verge of establishing a major partnership in China and we commend management for once again delivering on its promises," Thomas Weisel Partners analyst Dilip Warrier said in a note.
Warrier noted that with $8 billion in annual revenue in 2009 and big customers such as
, and FAW-
Wanxiang is China's largest auto parts supplier. Furthermore, the company is the second largest stakeholder in automotive manufacturer Guangzhou Automobile, and has global operations and partnerships with major original equipment manufacturers including
and Fiat, he said. Goldman Sachs has a neutral rating on Ener1 stock.
Wunderlich Securities has a hold rating on Ener1 as does Stifel Nicolaus.
interviewed Olympia analyst Paul Resnik in early December, ABAT had recently gone for a $30 million capital injection via the issuance of millions of additional shares. This diluting move was a disappointment for many investors -- announced just as the stock was strengthening on strong third-quarter results. A sharp selloff of the stock ensued. "The market is anxious to see what this surprise was about," Resnik had said.
"Maybe they actually have a plan for money. If they feel there are more opportunities to grow internally or externally, having additional funding would facilitate that. Let's see what they do with the money."
ABAT said it would likely use the proceeds for acquisitions and expansion of the company's battery manufacturing facility.
On Dec. 22, ABAT said it had agreed to acquire Shenzhen Zhongqiang New Energy Science & Technology, a manufacturer of lithium batteries for mobile phones and MP3 and video game consoles, for $20 million. The Company expected to close this acquisition on January 1.
Wunderlich Securities currently has a sell rating on A123, and Goldman Sachs has a neutral view on the stock. A123 recently told investors that the timing of its automotive OEM customer production ramp up was to be pushed out to the second quarter of 2011, from the fourth quarter of 2010. Goldman Sachs analyst Mark Wienkes sees the OEM delays as "normal growing pains," while remaining neutral on the stock: "Despite a leading technology and rapid capacity expansion, we believe the investment cycle ahead of the revenue ramp will take longer and require more capital than expected," he explained in a client note.
-- Written by Andrea Tse in New York.
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