Battery maker's growth given loan kick

PUBLISHED : Tuesday, 16 January, 2007, 12:00am
UPDATED : Tuesday, 16 January, 2007, 12:00am

China BAK Battery, one of the world's largest suppliers of lithium-based battery cells, is set to expand its development and manufacture of advanced products in the mainland after securing loan facilities worth 300 million yuan last month.

The Nasdaq-listed company is to build a new facility in Tianjin to complement its production lines in Shenzhen. Chief executive Li Xiangqian said the move would help extend the firm's reach into other market applications.

China BAK's battery cells are the principal component of rechargeable or replaceable batteries, commonly used in products ranging from cellular phones and notebook computers to cordless power tools and gaming devices.

The new battery cells to be made at Tianjin Beichen Hi-Tech Industrial Park will focus on applications in uninterruptible power supply and light electric vehicles, such as electric bicycles.

'Our new line of battery cells, which we expect to manufacture once our new Tianjin facility is completed, is a logical extension of our current product mix,' Mr Li said. 'It expands the market applications we serve and should strengthen our position as the worldwide market leader in lithium-based batteries cells.'

China BAK last month secured a 100 million yuan, four-year credit facility from China Development Bank and a 200 million yuan, five-year loan package from Agricultural Bank of China.

Mr Li said the credit lines proved 'the Chinese government's encouragement and strong support for the development of our company and the industry'.

The mainland's lithium-based battery industry involves more than 100 companies, accounting for an annual output of over 600 million units, that form a complete supply chain from raw materials and manufacturing equipment to supplying products for the export trade, according to a report from Dublin-based Research and Markets.

China is also a large consumer of lithium-ion and lithium-polymer batteries because of the country's large consumer electronics manufacturing industry which United States-based research firm In-Stat predicted will grow to US$167 billion by 2010 from US$71.5 billion last year.

Last July, China BAK launched a new production line in Shenzhen to make high-quality cylindrical battery cells for notebook computers.

'We believe this will position us to capture opportunities in the global notebook computer battery market,' Mr Li said. 'Our monthly production capacity has reached two million units and we believe we are one of the first manufacturers with an automated production line for cylindrical, lithium-ion battery cells in China.'

A report last month from California-based Roth Capital Partners described China BAK as 'a high-volume, low-cost producer' making progress in its growth strategy. It forecast China BAK revenue to reach US$201.6 million this year, up from US$143.8 million last year, due mainly to strong mobile handset battery sales. The shares, which reached US$12.50 last March, closed at US$6.16 on Friday.