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We now know what Advanced Battery Technologies (Nasdaq: ABAT ) will be doing with the cash it got from its recent share offering. Last week the company said it was spending $20 million to purchase Shenzhen Zhongqiang New Energy Science & Technology Co. Whew, that was a mouthful.
Shenzhen (for short) makes batteries for mobile phones, MP3 players, and video game consoles, which are a slight departure from the auto and scooter batteries Advanced Battery Tech is used to making. With vertical integration already in hand it looks like a little horizontal integration is the flavor of the day.
The company also announced it was purchasing the land use rights to a facility containing 56,000 square meters of usable space in Guangdong Province. The facility will cost $26 million and could produce $100 million in annual sales when it gets up and running.
If Advanced Battery Technologies can keep pumping out profits with the expanded business, it would keep outdistancing other domestic battery makers. American companies A123 Systems (Nasdaq: AONE ) and Ener1 (Nasdaq: HEV ) can't seem to get a singular focus on batteries to translate into profits at this point, so the expansion in China is impressive.
The deal won't close until early next year, so we will have to wait until the end of the quarter before we know if it is helping shareholders, but it shows Advanced Battery Technologies' strategy going forward: make batteries for anything and everything and make as many as possible.
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