By Brian Lantier, CFA
NASDAQ: CBAT
READ THE FULL CBAT RESEARCH REPORT
CBAK Energy Technology (NASDAQ: CBAT) released its fourth-quarter 2025 results before the market open today, which demonstrated a meaningful year-over-year increase in customer demand and strong pricing for the company's battery raw materials business. The company ramped its capacity meaningfully in the fourth quarter, and as of the first quarter of 2026, it now has 8.3 GWh across 3 facilities, up more than 250% from the beginning of 2025. The company's management noted that there is very strong demand for its new 40135 cells and that it hopes to have the Dalian facility operating at close to normal capacity by the second or third quarter of 2026.
The significant expansion of the Nanjing facility (growing from 1.5 GWh to 4.5 GWh) will likely take longer to come online fully, and we are now forecasting that this expansion will last into early 2027.
While this marks an obvious, meaningful expansion of CBAK's operations, we note that management continues to have ambitious growth plans, calling for a total capacity of 38 GWh.
The Dalian facility upgrade was commissioned in the fourth quarter, and the new 40135 production line has a total capacity of 2.3 GWh. Management noted that demand for these cells "far exceeds our available supply". Ultimately, the company has stated in recent investor presentations that its goal is to have 16GWh of capacity at Dalian.
Demand for the company's 32140 cells produced at the Nanjing facility remains strong despite global trade challenges that continue to impact the market. The company appears to have added more capacity at the Nanjing facility than we were projecting, as it now reports 4.5 GWh of total capacity, up from 1.3 GWh at the end of the third quarter (representing nearly a 250% increase). As with the company's Dalian facility, CBAK's management team has indicated that it intends to continue expanding at Nanjing, with the ultimate goal of achieving a total capacity of 20GWh at Nanjing.
The company's raw material business saw a sharp turnaround in 2025 as the market oversupply eased and demand for battery materials improved significantly worldwide. CBAK reported raw material sales of roughly $28 million in the fourth quarter, in line with our forecast, as pricing has improved significantly.
The company indicated that it expects the resurgence of the raw material business to continue throughout 2026, and management expects this business to deliver record revenues in 2026. For context, we believe the previous peak of this business was 2022, when revenues totaled $154 million.
We are not adjusting our target valuation, which remains $1.50/share, but we believe CBAK continues to have a compelling valuation while its business may be on the verge of a meaningful shift in its growth trajectory. If the company is able to demonstrate steady growth in its topline throughout 2026, we believe investors will begin to focus on the on the meaningful profit potential on the horizon at CBAK. We would encourage investors to review our complete updated report for an overview of trends in the battery cell market.
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