CBAK Energy (Nasdaq: CBAT) released its fourth quarter and full year earnings ended Dec. 31, 2021 on April 14, 2022.

2021 marked a major year for CBAK Energy as the Company gained significant traction across its product lines, powered by strengthened technology and product competitiveness, and amplified by further expanded production capacity catered to increasing battery demands for light electric vehicles ("LEV") and electric vehicles ("EV").

According to press release, CBAT turned profitable in 2021 on GAAP basis, with revenues growing 80% and 40% year-over-year to $27.8 million and $52.7 million in the fourth quarter and the full year, respectively.  Sales of high power lithium batteries grew 92% year-over-year in the fourth quarter of 2021.  Among which, revenues from high power lithium batteries used in LEV increased 3631% and 1779% year-over-year in 4Q-2021 and 2021, respectively.

The demonstrated strong financial and operational performance was also attributed to the stable supply of lithium-ion batteries raw materials, secured by CBAT's acquisition of majority stake in Zhejiang Hitrans Lithium Battery Technology Co. in November 2021, allowing the Company to build out its battery product ecosystem and scale the business. Having stable raw materials supply is especially crucial in an environment of rising commodity prices.

With the growth momentum in LEVs and EVs expected to remain strong in the foreseeable future, the Company has been mindful of the rising battery demands, and will continue to focus on scaling its battery production capacity, as well as expanding its battery material business to drive growth and cement its industry position as a frontrunner and leader in lithium-ion battery production and electric energy solutions. According to the Company, CBAT's Dalian lithium battery manufacturing plant is producing the model 26650/26700 battery at full capacity. As of March, CBAT had ~ $36 million outstanding battery orders from its Dalian facility and 90% end users were overseas.          

CBAT's material business is expected to be benefited by the rising material price; According to the Company, CBAT's material business unit is at full capacity. Considering the rising prices and the fact that the market is getting hotter, CBAT's material business is expected to grow quickly.

For the full year of 2021, on top of the 40% year-over-year revenue growth, CBAT continued to expand its gross margin levels by 2.5% to 9.7%, driven by a higher proportion of high-power lithium batteries sales, coupled with the addition of material business from the acquisition of Hitrans, resulting in a net income of $61.5 million, compared to a net loss of $7.8 million in 2020.

Additionally, CBAT continues to invest in new headcounts, new business and R&D (up 252% YoY in 4Q-2021).  These investments, together with the Company's comprehensive battery product ecosystem are expected to drive sustainable long-term growth for the Company.

Fourth Quarter and Full Year of 2021 Financial Highlights 

Net revenues were $27.8 million in 4Q-2021, representing a year-over-year increase of 80%, mainly driven by 92% year-over-year growth in high power lithium batteries sales, as well as consolidating the post-acquisition lithium battery materials revenues from Nov. 25, 2021 to Dec. 31, 2021.  For the full year of 2021, net revenues increased 40% YoY to $52.7 million from $37.6 million in 2020.

In terms of net revenues by end-product applications, revenues from high power lithium batteries used in LEV were $485,000 and $733,000, representing a YoY increase of 3631% and 1779% in 4Q-2021 and 2021, respectively.

Gross margin down from 6.8% 4Q-2020 to 3.7% in 4Q-2021, primarily due to the increase in raw material costs; while for the full year of 2021, gross margin expanded to 9.7%, an increase of 250 bps from 2020, mainly driven by the increased quality passing rate of products resulting from the Company's product quality control.

Net income attributable to CBAT shareholders increased to $9.2 million in 4Q-2021, compared to a net loss of $4.3 million in 4Q-2020. For the full year of 2021, GAAP net income was $61.5 million, compared to a net loss of $7.8 million in 2020, primarily driven by change in fair value of warrants liabilities from lower CBAT stock share prices.

Basic and fully-diluted net income per share were both $0.1 in the fourth quarter of 2021, compared to a net loss per share of $0.07 in 4Q-2020.  Basic and diluted income per share were both $0.70 in 2021, compared to $0.13 in 2020.

Cash and cash equivalents were $7.4 million as of December 31, 2021, compared to $2 million as of September 30, 2021, and $11.68 million as of December 31, 2020.

4Q-2021 Business Highlights and Recent Developments

In November 2021, CBAT completed the acquisition of ~86% majority stake in Zhejiang Hitrans Lithium Battery Technology Co., and had started to consolidate financials since Nov. 25, 2021.

On December 21, 2021, CBAT subsidiary CBAK New Energy announced that the Company has agreed to develop a customized battery pack with AZAPA R&D China for the Sino-Japan joint venture, which designs and produces electronic control systems and battery and control systems for electric vehicles.  Deal terms were not disclosed.

The battery pack will initially be used for testing low-speed electric vehicles produced by Daihatsu Motor Co., a subsidiary of Toyota Motor Corp. Meanwhile, CBAK Nanjing will cooperate with AZAPA to jointly explore international markets.  CBAK targeted to deliver three sample battery pack sets to AZAPA by February 2022.

The designation of developing the battery pack demonstrates new recognition and trust from the industry in CBAT's technology capabilities, while empowering the Company to broaden product offerings for electric vehicles.

DISCLOSURES AND DISCLAIMERS

Stone Street Group LLC ("Stone Street") publishes research reports on publicly-traded companies. Stone Street has been retained by the Company discussed in this report (the "Company") to provide ongoing digital investor relations services, including the creation and dissemination of this report. All research published by Stone Street is based on public information, or on information from the Company that the Company is required to promptly make public.

Stone Street is not a broker-dealer or a "covered person" under SEC Regulation AC, and does not distribute its research through a registered broker-dealer or any associated person of a registered broker-dealer. Accordingly, Stone Street is exempt from the provisions of Regulation AC. Nevertheless, Stone Street makes the following voluntary disclosures and disclaimers in connection with its research reports:

NO GUARANTEE:  This research report is not a substitute for the exercise of an investor's independent due diligence and independent investment determinations. Information contained herein is based on sources we believe to be reliable but we do not guarantee their accuracy. It should be presumed that the analyst who authored this report has had discussions with the Company to endeavor to ensure factual accuracy prior to publication, however, no independent due diligence or verification has been undertaken by the analyst.  No endorsements are made in respect of information provided or published by the subject Company and relied upon by the analyst for purposes of this research report. Recipients of this report should consider this report as only one factor in making any investment decision. This report is for information purposes only and is not intended as an offer to sell or a solicitation to buy securities.  Any and all information provided by the Company which has been publicly disclosed as "forward looking information" remains subject to all uncertainties in such regard and Stone Street makes no assurances or guaranties of actual outcomes. 

NO CONFLICTS OF INTEREST:  Stone Street does NOT own securities of the issuers described herein, and Stone Street does not make a market in any securities. Stone Street does not engage in, or receive compensation from, any investment banking or corporate finance-related activities with the Company discussed in the report. Stone Street's contracts with issuers protect Stone Street's full editorial control of all research, timing of release of reports, and release from liability for negative reports.

ANALYST INDEPENDENCE:  Each Stone Street analyst has full discretion on the analysis and revenue targets contained in the report, based on his or her own due diligence. Analysts are paid in part based on overall profitability of Stone Street. No part of analyst compensation was, or will be, directly or indirectly, related to the specific recommendations or views expressed in any report or article. Stone Street policy does not allow an analyst or a member of their household (i) to own, trade, or have any beneficial interest in any securities of any Company that analyst covers, or (ii) serve as an officer or director of a covered Company.

RISK FACTORS:  Earnings targets and opinions concerning the composition of market sectors included in this report reflect analyst judgments as of this date and are subject to change without notice. A risk to our earnings targets is that the analyst's estimates or forecasts may not be met. This report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from such forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed in the "Risk Factors" section in the issuer's SEC filings available in electronic format through SEC Edgar filings at www.sec.gov.

COMPENSATION:  Stone Street received a flat fee from or on behalf of the Company for the creation and dissemination of the report. Stone Street has not received investment banking income from the Company in the past 12 months, and does not expect to receive investment banking income from the Company in the next 12 months.

ANALYST CERTIFICATION:  The research analyst certifies that this report accurately reflects his/her personal views about the Company's securities that none of the research analyst's compensation was, is or will be, directly or indirectly, related to the analyst's specific recommendations or views contained in this research report.