GP Batteries International

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#51
GP batteries has moved from its low of 0.54 to 0.605 as of day of closing.

Looking at GP's battery operating cash flow instead of bottom line, the business is attractive at 5.26x P/FCF. No doubt it seems the company is hoarding its cash and giving very little dividends. I Sincerely hope the company will do something with its 93M of cash: 1)pay down the debts, 2) share buyback or 3) special dividend

(vested)
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#52
For the past 3 market days, GP industries has been buying up GP batteries shares (not my ideal kind of "share buy back") The latest purchase was at 0.605 per share. In my view, GP industries may continue to buy GP batteries shares up to 0.65 or support it at the 0.60 level.

This is because, the company's operations has been generating 10-12 cents per share of cash annually. From GP industries perspective, it is like buying into a biz which will take 6 years to pay it back. This FY GP Batteries will be recognizing a few mil of profits from the sale of its SG property and the absence of write offs may make it seem like it has turn around from previous FY.

Sincerely hoping for GP batteries to be privatized with takeover offer at $1.10 (10x P/FCF). Reason for my investment is its low NAV and the "turnaround" story.

<vested>
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#53
I have been an odd lot investor in both GPI and GPB and been following their entire group since mid 90s. I think HK management running Chinese operations can be well trusted. However, I think the generally stable operating business profile may have been affected by raw material fluctuations, rising labour costs and perhaps a shortening of product life cycle due to the derived demand nature of their products.

Thinly traded HK parent Gold Peak Ind owns 83% of GP Ind that in turns owns 53.5% of GPB. GPI has been sustaining dividends above net earnings since 2010 and that is mainly to upstream to HK parent. With GPI now controlling GPB as a subsidiary, it make sense for GPB to upstream as much cash to GPI for upstreaming to Gold Peak Ind.

I personally think that GPB has seen the worst of fortunes in the last few years:

i) soaring raw material prices on the onset of GFC due to shifted speculative fund flows into commodities;

ii) if I remember correctly, there was some sort of environmental issues with GPB plant in China

iii) labour issues and the current rising labour costs affecting most Chinese based operations.

Raw material prices have since stablised and with Chinese economy off the boils, this should work in GPB favour.

Environmental issues should be behind them while automation should help to mitigate rising labour costs.

With the ill fated electric vehicle project totally written off, GPB should easily turn around without the repeated one-offs.

However, forward drivers remain quite uncertain as the global battery market is a fairly stable one.

There is no doubt that GPI will continue to accumulate GPB as long as they deemed it accretive. In fact, as long as GPI buys below GPB's book value, I think GPI will accumulate non cash negative goodwill. Since GPI already controls a majority stake in GPB, it make sense to keep its open market operations as it is investing a business that it already own (but not fully) at below "replacement costs" as indicated by Mr Market.

I am only vested GPB today, above GPI's open market purchase today. However, I think there should be meaningful upside to GPB over the next 18 months in view of the clearing of decks that led to a rights issue recently.

For an established and sizable operator in the battery manufacturing space, one can never rule out the possibility of private equity buyout as well at a price that is acceptable to GPI.

Vested
GG
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#54
DBS Vickers Noted:

GP Batteries (S$0.65; GP SP)
GP Batteries looks to be a turnaround play, trading at only 0.4x
PBV ( 5-yr historical mean). After a round of rationalisation,
management believes the group is in better shape to return to
growth and profitability. We also believe GP could turn
profitable, premised on the following: 1) revenues were stable
in the past two years but margins have been improving, 2)
absence of loss-making venture, and 3) lower finance costs. In
addition, GP might book S$7m gain on disposal of its factory
building. Interestingly, parent company GP Industries has raised
its stake in GP to 54% after a series of open market purchases
since February. In our view, GP looks ripe for privatisation given
record low net gearing of 0.2, sustainable FCF generation, and
potential turnaround to profit.
 GP Batteries is currently the largest consumer battery
manufacturer in China, supplying an extensive range of
battery products to OEMs, leading battery companies, and
retail markets under its own GP brand name. The PRC is GP’s
biggest market at 57% of FY14 revenues followed by Europe
(25%) and America (18%). Rechargeable products account
for 22% of sales, and the remaining 77% is derived from
primary batteries.
 GP reported S$52m net loss for FY14 (FYE Mar) but
management explained that it would have made S$20m
pretax profit if not for S$50m impairment charge for winding
down an electric vehicle venture and consolidation of plants.
This year, GP expects the battery market to be stable but the
rechargeable battery sector to remain competitive. There is
good potential for GP to turnaround its operations with the
loss-making unit terminated, firm revenues, improving
margins and lower finance costs. In addition, GP might book
S$7m gain from the sale of its factory building in 1HFY15.
 The parent company GP Industries has raised its stake in GP
Batteries from about 50% to 53.71% currently. The shares
were purchased in the open market at between S$0.565
and S$0.605 per share, close to its historical low of S$0.36
in October 2008. GP once traded to a high of S$5.65 in Feb
1998.
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#55
What Dbs has said is all written on our posts
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#56
(17-06-2014, 10:04 AM)CY09 Wrote: What Dbs has said is all written on our posts

DBS also read valuebuddies? =)
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#57
(17-06-2014, 11:07 AM)kikababoo Wrote:
(17-06-2014, 10:04 AM)CY09 Wrote: What Dbs has said is all written on our posts

DBS also read valuebuddies? =)

Why not since analysts are well known for co-sharing for ideas...
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#58
(12-06-2014, 10:45 PM)greengiraffe Wrote: With GPI now controlling GPB as a subsidiary, it make sense for GPB to upstream as much cash to GPI for upstreaming to Gold Peak Ind.

Hi uncle GG - one question for you. GBP has always paid dividends and good ones too. GPI was holding it at 49% for years, but has had effective control nonetheless. So what has changed now to make GPI want to buy GPB shares?
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#59
(17-06-2014, 11:29 AM)thefarside Wrote:
(12-06-2014, 10:45 PM)greengiraffe Wrote: With GPI now controlling GPB as a subsidiary, it make sense for GPB to upstream as much cash to GPI for upstreaming to Gold Peak Ind.

Hi uncle GG - one question for you. GBP has always paid dividends and good ones too. GPI was holding it at 49% for years, but has had effective control nonetheless. So what has changed now to make GPI want to buy GPB shares?

Hi Nephew,

That is a very good question.

I think it may have to do with the closure of the 2 decade long electric vehicle project. Somehow, strangely enough despite the taking off of Japanese hybrids like Prius, GPB has never nailed down as a key supplier of such batteries - perhaps I m ignorant or perhaps its a trade secret that is well guarded by the Japanese.

In any event, Euro diesel technology has become so advanced that it even eclipse Japanese hybrid technology in recent years.

The late chairman's tragic end to his life may also be indicative of a closure of an expensive era. I am not trying to speculate what went on with his life but there appears to be too much of coincidence here since GPB has went through the worst of times when commodity prices when through the roof as a result of initial stages of QE (which led to rampant speculation in commodities).

Interestingly, while GP Ind has bought a little of GPB back in 2010, there was hardly any significant purchases of GPB until this year which transformed GPB from an associate to a subsidiary. Note that free cashflow ex woking capital changes amount to around S$30m the last 2 years or close to S$0.20 a share, it remains an attractive boring cashflow business to be vested in.

Vested
GG
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#60
Would GP Bat be involved in such a li-ion technology...

http://www.afr.com/p/national/holy_solar...MSt75pFncN

“Holy s##t!” Solar panel batteries rev up electricity prices

PUBLISHED: 18 HOURS 59 MINUTES AGO | UPDATE: 18 HOURS 59 MINUTES AGO

James Deutsher with his new Zero SR electric storage motorcycle; it’s not yet plugged into a solar power system yet, but it can be.  Photo: Josh Robenstone
BEN POTTER AND ANGELA MACDONALD-SMITH

Out of the garage, the red and black Zero SR motorcycle purring contentedly below Melbourne’s Bolte Bridge is a beast that produces 60 horsepower and has won a “Holy s##t!” road-test rating from Gizmag.

At home, it doubles as a 14kWh ­storage battery that the bike’s owner can plug into a solar roof-top system to power the house and avoid peak grid charges.

It’s part of a new wave of battery technology that – if embraced by the 1.3 million Australian households with roof-top solar panels – threatens to tighten the screws on an electricity industry already battling falling demand.

New generation batteries like those in the Zero motorcycle or in stationary storage systems are a quantum leap forwards for households that make their own electricity. They come with grid management systems that crunch data and tell you whether it’s better value now to use solar power, store it for later use, sell it back to the grid or buy ­electricity from the grid.

Adam Dalby, owner of Solar Australia in Newcastle, has installed 16 lithium-ion storage systems costing $7500 to $14,000 for a fridge-sized 8kWh system, which can make a household self-sufficient 70-80 per cent of the time.

Bigger systems could just about take them “off the grid”. Dalby says houses in NSW can save 52¢ /kWh at peak times by storing solar power for later rather than having to sell it into the grid at the reduced 6¢ feed-in-tariff.

ELECTRIC INDUSTRY’S DEATH SPIRAL
Experts warn that this could accelerate the electricity industry’s “death spiral”, pushing up costs for anyone reliant on the grid. As industry shutdowns and energy efficiencies cut electricity demand, network charges – more than half of retail prices – rise. The more people cut their use, the more prices rise.

That is raising tensions between “Big Power”, solar households and others. Anger at Big Power blaming solar roof-tops’ runaway success adds to the momentum. Certainly, scorn for Big Power was palpable at a Thursday event put on by Solar Citizens – a 50,000-strong lobby for solar households – in Melbourne.

The home storage market is starting to stir. James Deutsher, who imports Zeros from California and has sold 10 from his Collingwood warehouse, says 40 per cent of inquiries are from “green-oriented” people; the rest want “the next curve in motorcycle evolution”.

At $19,000-$25,000, the Zero SR isn’t cheap and none is yet connected to a solar system. Most modern storage systems are stationary stacks of lithium-ion batteries and demand management smarts. Industry adviser Nigel Morris estimates about 150 systems have been sold this year, up from 50-100 for 2013.

Soaring retail energy prices and the slashing of feed-in tariffs from 60¢ or more, to 6-8¢ encouraged Bosch Australia to bring in the high-end BPT-S 5 Hybrid, which provides 4.4-13.2 kWh. It sells for about $25,000-$30,000 retail.

“That’s the main driver now,” said Frederik Troester, head of power tech sales. The range uses the same batteries as a Mercedes S Class hybrid and comes with a 15-year warranty.

COST STILL AN OBSTACLE
Cost is still an obstacle. Dalby’s systems have a typical nine-year payback. But lithium-ion battery prices have halved since 2008, and some see a 75 per cent drop over the next decade. Dalby sees a tipping point in two years “People will become interested and think, ‘well, that price is right’.”

Iain MacGill, associate professor of electrical engineering at UNSW, says lithium-ion storage is a “game changer” that makes quitting the grid feasible – a “revolutionary thought” that “could change the nature of the discussion”.

MacGill cautions safety is an issue – stored energy can escape as fire. Lucy Carter, a research fellow in the Grattan Institute’s energy program, says it is still not strictly economical for many.

But Carter says that such things “go out the window” when prices fall and hobbyists and those cheesed off with suppliers take to new technology. “They are doing it because it’s cool”, she tells AFR Weekend. She has seen storage systems at home shows. “That’s a good indication that someone senses there’s a mainstream market for them.” The systems can “shave the peaks” on critical days, she says, helping to parry the “free-rider” charge that dogs solar.

On Thursday, the Solar Citizens event was part revival meeting, with testimonials from “saved” solar householders, and part campaign rally to warn politicians off any changes to the renewable energy target – one of the props for solar . A crowd of about 200 – earnest faces, cycling gear and a few “crazy professor” hairdos – cheered strategies to “sting” suppliers.

“I am now inclined to say, ‘stuff the utilities, stuff the government’, put on more panels and go off the grid,” said Peter Campbell of Templestowe, a Collins Street IT consultant.

Morris likened the industry campaign against the RET to “a boxer on the ropes, who starts swinging crazily because he feels he is going down”.
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