Long forgotten, China Bak Battery has suddenly come back to life, gaining 60 percent over the last two days. The revival coincides with Korean battery maker LG Chem’s announcement that it will build a factory in Nanjing to make batteries for electric cars. The LG plant is expected to be up and running by the end of 2015.
What does Bak have to do with LG’s plant? Apparently nothing. Bak makes batteries for mobile phones and other consumer electronics. It doesn’t appear to have any strength in e-car power sources but sometimes there’s no arguing with the stock market’s logic.
For those keen to jump on the bandwagon, don’t check the company’s financials or you could lose courage. Bak has been on a losing streak for years, with 2013 losses almost double the previous year’s.
Can Bak’s stock chart tell us anything? Well it depends on how you look at it. The stock hit a peak of about US$69 in 2006 and is now slightly above US$4.00 after the recent jump. The bears will see an eight-year downtrend and the many investors fried along the way. But, those eager to try their luck may, instead see ample room for rebound.
Stocks aside, if the LG move means anything it’s probably that the world is responding to China’s pledge to produce more eco-friendly vehicles.
Rival battery titan Samsung SDI said in February it is going to put US$600 million into Shaanxi province in China to build the country’s biggest lithium ion battery plant for e-cars.
It’s not difficult to see why both Korean firms are optimistic about China’s market potential. Major international auto brands including Audi, BMW and Nissan have stepped up their green-car development plans and domestic heavyweights like SAIC are also making new-energy cars their major focus. More batteries will be needed to power more e-cars.
Bak may not be a sure bet for e-car bulls but some great companies will definitely emerge as China rolls toward its target of putting 5 million these new-energy models on the road by 2020.
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