Advanced Battery Technologies (ABAT)

®
EARNINGS UPDATE Amit Dayal
212-356-0535
adayal@rodm.com
CHINA Chang Liu
212-430-1733
cliu@rodm.com

November 16, 2010 Market Outperform / Speculative Risk

ABAT: 3Q10 Earnings Update

MARKET DATA 11/16/2010 3Q10 Results: ABAT reported its 3Q10 results with revenue and net
Price $4.00 income of $25.9 MM and $11.1 MM, with diluted EPS of $0.16,
Exchange NASDAQ compared to our expectations of $27.0 MM, $8.2 MM, and $0.12,
Target Price $6.00 respectively. Total revenue grew by 46.4% Y-o-Y and 13.6%
52 Wk Hi - Low $4.80 - $3.02 sequentially, driven by a strong growth from EV segment. Gross profit
EV(MM) $201.3 reached $13.8 MM, an increase of 80.4% from $7.6 MM in 3Q09 and
Market Cap(MM) $275.6 24.6% from 11.0 MM in 2Q10, representing a gross margin of 53.1%.
Shares Out (MM) 68.9 Operating profit in 3Q10 was $12.0 MM, or 46.4% of total sales,
Public Mkt Float (MM) 59.4 compared to $5.2 MM in 3Q09 and $9.0 MM in 2Q10. ABAT delivered a
Avg. Daily Vol 853,215.0
net income of $11.1 MM, implying a net margin of 42.8%, growing from
BALANCE SHEET METRICS $4.8 MM in 3Q09 and $12.5 MM in 2Q10.
Cash (MM) $74.3
LTD (MM) $0.0 Robust E-Scooter Growth: E-Scooter sales continue to drive top-line
Total Debt/Total Equity NA growth. During 3Q10, EV business generated $13.9 MM in sales,
Debt/Capital NA
growing by 107.2% Y-o-Y from $6.7 MM in 3Q09 and 10.2% sequentially
Price/Book Value 1.6x
Book Value/Share $2.46
from $12.6 MM in 2Q10. In comparison, Battery segment contributed
$12.0 MM in revenue, an increase of 9.2% Y-o-Y and 17.7%
EARNINGS DATA ($) sequentially.
FY - Dec 2009E 2010E 2011E
Q1 (Mar) 0.07 0.11A 0.11
Margin Further Improved: The company attributed the higher gross
Q2 (Jun) 0.14 0.18A 0.13
Q3 (Sep) 0.08 0.16A 0.16
margin of 53.1% to the increased average selling price in its
Q4 (Dec) 0.07 0.15 0.20 E-Scooter/Bike orders as the overseas demand for ABAT’s EV products
Full Year EPS 0.35 0.60 0.60 continues to grow. Additionally, according to 10-Q filing, due to a
Revenue (MM) 63.6 99.7 138.6 successful integration of Wuxi ZQ, the company is now able to keep the
Net Income (MM) 21.4 41.8 42.4 overall COGS under control for its EV manufacturing, therefore creating
support on its gross margin.
VALUATION METRICS
Price/Earnings 11.4x 6.7x 6.7x Expect Higher Utilization In Battery Manufacturing in FY11: We
EV/Revenue 3.2x 2.0x 1.5x recently visited ABAT’s battery manufacturing facility located in
EV/EBITDA 4.4x 3.7x ShuangCheng City outside Harbin. Currently Lines C+D are currently
Market Cap/EBITDA 6.0x 5.0x running at full utilization and lines A+B are running at 20%-30%
Y/Y EPS Growth 12.9% 71.4% 0.0% utilization levels. Factory managers believe that A+B lines should be
running at high utilization by mid 2011. We believe top-line growth could
INDICES be further supported as the total utilization gradually picks up in FY11.
DJIA 11,202.0
SP-500 1,197.8
NASDAQ 2,131.5 Our Estimates: For 4Q10 we expect a revenue and net income of $31.4
Russell 2000 719.9 MM and $10.6 MM, with diluted EPS of $0.15. For full year FY10, we are
projecting $99.7 MM in revenue and $41.8 MM in net income, with
1 Year Price History
diluted EPS of $0.60. We expect battery sales to contribute ~$48.1 MM
5
in revenue in FY10, while EV is estimated to account for $51.6 MM. For
4
FY11, our estimates for revenue, net income, and diluted EPS are
3
$138.6 MM, $42.4 MM, and $0.60, respectively.
2
Q3 Q1 Q2 Q3
2010 2011
10
8
6 Valuation: We are maintaining our 12 month price target of $6.00. At
4
2
0
current levels ABAT is trading at a P/E multiple of ~6.6x and ~6.7x to our
Created by BlueMatrix FY10 and FY11 estimates. At our $6.00 price target ABAT would trade at
a P/E multiple of ~10.0x to our estimates for both FY10 and FY11. This
falls in the middle of the range of 8x to 20x P/E multiples for comparable
battery and Cleantech companies. We maintain our Market Outperform
rating.

For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 5 - 6 of this report.
Advanced Battery Technologies November 16, 2010

3Q10 Results
ABAT reported its 3Q10 results with revenue and net income of $25.9 MM and $11.1 MM, with diluted EPS of $0.16,
compared to our expectations of $27.0 MM, $8.2 MM, and $0.12, respectively. Total revenue grew by 46.4% Y-o-Y and
13.6% sequentially, driven by a strong growth from EV segment. By segments, battery sales contributed $12.0 MM or
46.3% of total, increased by 9.2% Y-o-Y and 17.7% sequentially. Electric Vehicles accounted for $13.9 MM or 53.7% of
total sales, growing by 107.2% Y-o-Y and 10.2% sequentially. Gross profit reached $13.8 MM, an increase of 80.4% from
$7.6 MM in 3Q09 and 24.6% from 11.0 MM in 2Q10, representing a gross margin of 53.1%. Operating profit in 3Q10 was
$12.0 MM, or 46.4% of total sales, compared to $5.2 MM in 3Q09 and $9.0 MM in 2Q10. ABAT delivered a net income of
$11.1 MM, implying a net margin of 42.8%, growing from $4.8 MM in 3Q09 and $12.5 MM in 2Q10. As of July 31, 2010,
ABAT had a backlog of ~$55.4 MM for delivery throughout the next 12 months, including a battery backlog of ~$41.6 MM
and $13.8 MM in EV backlog. The company ended the quarter with $74.3 MM of cash and $107.4 MM of working capital.
During the first 9 months of 2010 the company also generated ~$22.6 MM of free cash flow.

Figure 1: 3Q10 Revenue Breakdown By Products, in $000s Figure 2: 2Q10 Revenue Breakdown By Products, in $000s
Small Small
Capacity Capacity
Battery, Battery, 870.3
1,282.5 , , 4%
5% Medium
Medium Capacity
Capacity Battery,
Battery, 2,691.3 , 12%
4,284.2 , 16%
Large
Capacity
E-Scooter, Large E-Scooter, Battery,
13,920.2 , 54% Capacity 12,634.0 , 55% 4,111.8 , 18%
Battery,
3,702.8 ,
14% Miner's
Lamp,
2,527.9 ,
11%
Miner's Lamp,
2,741.3 , 11%

Source: Company Filing, RODM Research Source: Company Filing, RODM Research

Key Takeaways
Robust E-Scooter Growth: E-Scooter sales continue to drive top-line growth. During 3Q10, EV business generated
$13.9 MM in sales, growing by 107.2% Y-o-Y from $6.7 MM in 3Q09 and 10.2% sequentially from $12.6 MM in 2Q10. In
comparison, Battery segment contributed $12.0 MM in revenue, an increase of 9.2% Y-o-Y and 17.7% sequentially.

Margin Further Improved: The company attributed the higher gross margin of 53.1% to the increased average selling
price in its E-Scooter/Bike orders as the overseas demand for ABAT’s EV products continues to grow. Additionally,
according to 10-Q filing, due to a successful integration of Wuxi ZQ, the company is now able to keep the overall COGS
under control for its EV manufacturing, therefore creating support on its gross margin.

Expect Higher Utilization In Battery Manufacturing in FY11: We recently visited ABAT’s battery manufacturing facility
located in ShuangCheng City outside Harbin. Currently Lines C+D are currently running at full utilization and lines A+B
are running at 20%-30% utilization levels. Factory managers believe that A+B lines should be running at high utilization by
mid 2011. We believe top-line growth could be further supported as the total utilization gradually picks up in FY11.

Our Estimates: For 4Q10 we expect a revenue and net income of $31.4 MM and $10.6 MM, with diluted EPS of $0.15.
For full year FY10, we are projecting $99.7 MM in revenue and $41.8 MM in net income, with diluted EPS of $0.60. We
expect battery sales to contribute ~$48.1 MM in revenue in FY10, while EV is estimated to account for $51.6 MM. For
FY11, our estimates for revenue, net income, and diluted EPS are $138.6 MM, $42.4 MM, and $0.60, respectively.

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Advanced Battery Technologies November 16, 2010

Valuation
We are maintaining our 12 month price target of $6.00. At current levels ABAT is trading at a P/E multiple of ~6.6x and
~6.7x to our FY10 and FY11 estimates. At our $6.00 price target ABAT would trade at a P/E multiple of ~10.0x to our
estimates for both FY10 and FY11. This falls in the middle of the range of 8x to 20x P/E multiples for comparable battery
and Cleantech companies. We maintain our Market Outperform rating.

Figure 3: ABAT Comparable Analysis

Shares Out Rating MKT Cap. Cash E/V Debt EPS P/E
Company Ticker Close (MM) ($MM) ($MM) ($MM) Y2009 Y2010 Y2011 Y2009 Y2010 Y2011

Enersys Inc ENS $29.36 49.2 Not Rated 1,444.8 178.8 1,600.1 334.1 1.85 1.85 2.37 15.9 15.9 12.4
Altair Nanotechnologies ALTI $2.58 6.8 Not Rated 17.4 8.0 9.8 0.4 (0.72) (0.72) (0.68) (3.6) (3.6) (3.8)
Ener 1 Inc HEV $4.03 151.7 Not Rated 611.2 52.1 635.8 76.7 (0.29) (0.29) (0.13) (14.0) (14.0) (30.2)
Valence Technology VLNC $1.19 144.6 Not Rated 172.1 4.2 248.6 80.7 (0.11) (0.11) (0.14) (10.6) (10.6) (8.6)
C&D Technologies CHP $0.13 26.3 Not Rated 3.4 3.7 159.0 159.2 0.20 0.20 0.41 0.7 0.7 0.3
Ultralife Corp. ULBI $6.43 17.2 Not Rated 110.9 7.6 115.8 12.4 (0.54) 0.21 #N/A (11.9) 31.1 #N/A
Highpower International Inc. HPJ $3.43 13.6 MO 46.6 69.4 (6.7) 16.2 0.33 0.42 0.53 10.4 8.2 6.5
Energy Conversion Devices ENER $4.68 49.8 Not Rated 233.2 194.3 298.5 259.6 0.29 (1.13) (0.56) 16.1 (4.2) (8.4)
A123 Systems Inc. AONE $8.66 105.0 Not Rated 909.2 303.1 627.2 21.1 (2.55) (0.74) (0.26) (3.4) (11.8) (33.6)
China Ritar Power Corp. CRTP $2.82 21.9 MO 61.6 99.0 (30.9) 6.5 0.43 0.56 0.82 6.6 5.0 3.4
China Bak Battery Inc CBAK $2.01 63.6 Not Rated 127.9 24.9 283.2 180.2 (0.25) 0.04 0.23 (8.0) 50.3 8.7

AVERAGE $ 5.94 59.1 339.8 93.7 393.1 114.7 (0.1) (0.18) 0.3 12.3 18.5 7.8

ADVANCED BATTERY TECHNOLOGIES, INC ABAT $4.00 69.7 MO 278.9 151.4 127.5 - 0.35 0.60 0.60 11.6 6.6 6.7

Source: FactSet, RODM Research

Risks
1) Intense Competition 2) Country Risk 3) Volatility in raw material prices.

RODMAN & RENSHAW EQUITY RESEARCH 3

Advanced Battery Technologies November 16, 2010

Advanced Battery Technologies Inc.(NasdaqCM: ABAT)

Income Statement
All Figures in $'000's Except Per Share Data
CY2006 CY2007 CY2008 CY2009A 1Q-Mar-10 2Q-Jun-10 3Q-Sep-10 4Q-Dec-10 CY2010 1Q-Mar-11 2Q-Jun-11 3Q-Sep-11 4Q-Dec-11 CY2011
Battery Sales 16,329.0 31,898.0 45,172.1 43,232.0 10,479.4 10,201.4 12,010.7 15,363.0 48,054.4 13,623.2 14,792.0 18,016.0 23,812.7 70,243.9
EV Revenues 20,329.9 9,069.7 12,634.0 13,920.2 16,016.5 51,640.3 11,337.1 15,792.5 18,792.3 22,423.1 68,344.9
Total Revenues 16,329.0 31,898.0 45,172.1 63,561.9 19,549.0 22,835.4 25,930.9 31,379.5 99,694.8 24,960.2 30,584.5 36,808.3 46,235.8 138,588.8
Total Revenue Q-o-Q -8.61% 16.81% 13.56% 21.01% -3.74% 22.53% 20.35% 25.61%
Total Revenue Y-o-Y 286.67% 95.35% 41.61% 40.71% 82.94% 65.82% 46.38% 46.70% 56.85% 27.68% 33.93% 41.95% 47.34% 39.01%
Cost of Good Sold 7,345.0 18,040.0 23,122.6 35,169.5 9,933.3 11,796.1 12,170.1 17,415.6 51,315.1 14,227.3 17,433.2 20,980.7 26,354.4 78,995.6
COGS % 44.98% 56.56% 51.19% 55.33% 50.81% 51.66% 46.93% 55.50% 51.47% 57.00% 57.00% 57.00% 57.00% 57.00%
Gross Margin 8,984.0 13,858.0 22,049.5 28,392.4 9,615.7 11,039.2 13,760.8 13,963.9 48,379.6 10,732.9 13,151.3 15,827.6 19,881.4 59,593.2
Gross Margin % 55.02% 43.44% 48.81% 44.67% 49.19% 48.34% 53.07% 44.50% 48.53% 43.00% 43.00% 43.00% 43.00% 43.00%
General and Adm inistrative 1,424.0 3,283.0 3,263.4 11,154.2 2,615.9 1,992.8 1,546.7 2,824.2 8,979.7 1,996.8 2,446.8 2,944.7 3,698.9 11,087.1
General and Administrative % 8.72% 10.29% 7.22% 17.55% 13.38% 8.73% 5.96% 9.00% 9.01% 8.00% 8.00% 8.00% 8.00% 8.00%
Research and Developm ent 181.0 384.0 4.5 348.3 - - 194.4 156.9 351.3 124.8 152.9 184.0 231.2 692.9
Research and Development % 1.11% 1.2% 0.01% 0.55% 0.00% 0.75% 0.50% 0.35% 0.50% 0.50% 0.50% 0.50% 0.50%
Operating Incom e (EBIT) 7,379.0 10,191.0 18,781.6 16,889.9 6,999.8 9,046.4 12,019.7 10,982.8 39,048.6 8,611.3 10,551.6 12,698.9 15,951.3 47,813.1
Operating Margin % 45.19% 31.95% 41.58% 26.57% 35.81% 39.62% 46.35% 35.00% 39.17% 34.50% 34.50% 34.50% 34.50% 34.50%
Other Expenses (Incom e) 246.0 (15.0) (36.9) (10,702.3) (1,272.0) (4,274.7) 10.3 (941.4) (6,477.8) (374.4) (458.8) (552.1) (693.5) (2,078.8)
Other Expenses % 1.51% -0.05% -0.08% -16.84% -6.51% -18.72% 0.04% -3.00% -6.50% -1.50% -1.50% -1.50% -1.50% -1.50%
Earnings Before Taxes (from continuing operations)
7,133.0 10,206.0 18,818.5 27,592.2 8,271.7 13,321.1 12,009.4 11,924.2 45,526.4 8,985.7 11,010.4 13,251.0 16,644.9 49,892.0
Earning before taxes % 43.68% 32.00% 41.66% 43.41% 42.31% 58.34% 46.31% 38.00% 45.67% 36.00% 36.00% 36.00% 36.00% 36.00%

Incom e Taxes (907.0) 0 2,722.4 6,233 747.2 810.9 902.6 1,311.7 3,772 1,348 1,652 1,988 2,497 7,484
Income Taxes % -12.72% 0.00% 14.47% 22.59% 9.03% 6.09% 7.52% 11.00% 8.29% 15.00% 15.00% 15.00% 15.00% 15.00%
Net Incom e (Loss) 8,040.0 10,206.0 16,096.1 21,359.6 7,524.6 12,510.2 11,106.8 10,612.6 41,754.2 7,637.8 9,358.8 11,263.3 14,148.1 42,408.2
Net Income (Loss) % 49.24% 32.00% 35.63% 33.60% 38.49% 54.78% 42.83% 33.82% 41.88% 30.60% 30.60% 30.60% 30.60% 30.60%

Net Incom e Available to Com m on Shareholders 8,040.0 10,206.0 16,096.1 21,359.6 7,524.6 12,510.2 11,106.8 10,612.6 41,754.2 7,637.8 9,358.8 11,263.3 14,148.1 42,408.2
Net Income Avaliable to Common Shareholders 49.24%
% 32.00% 35.63% 33.60% 38.49% 54.78% 42.83% 33.82% 41.88% 30.60% 30.60% 30.60% 30.60% 30.60%
Foreign currency translation adjustm ent 2,912.5 (516.141) 419.6 811.20 3,237.43 4,468.2
Com prehensive Incom e 19,008.6 20,843.5 7,944.2 13,321.4 14,344.3 10,612.6 46,222.4
Reported Earnings Per Share 0.17 0.22 0.31 0.35 0.11 0.18 0.16 0.15 0.60 0.11 0.13 0.16 0.20 0.60
Y-o-Y Growth % -2646.96% 26.94% 42.14% 11.11% 66.44% 31.27% 104.10% 111.65% 74.12% -0.39% 21.19% -12.93% 24.22% -0.71%
Weighted Average Fully Dilluted Shares Outstanding
46,569.4 46,569.4 51,672.0 60,222.7 68,694.8 68,661.8 69,723.4 70,000.0 69,270.0 70,000.0 70,500.0 71,000.0 71,500.0 70,750.0
Depreciation & Am ortization 516.3 699.7 763.6 2,629.6 1,558.0 1,542.0 1,288.8 2,196.6 6,585.3 249.6 351.7 441.7 554.8 1,597.9
Depreciation & Amortization % 3.16% 2.19% 1.69% 4.14% 7.97% 6.75% 4.97% 7.00% 6.61% 1.00% 1.15% 1.20% 1.20% 1.15%
EBITDA 7,895.3 10,890.7 19,545.2 19,519.6 8,557.7 10,588.4 13,308.5 13,179.4 45,634.0 8,860.9 10,903.4 13,140.6 16,506.2 49,411.0
EBITDA % 48.35% 34.14% 43.27% 30.71% 43.78% 46.37% 51.32% 42.00% 45.77% 35.50% 35.65% 35.70% 35.70% 35.65%
Source: Company Filing, RODM Research

RODMAN & RENSHAW EQUITY RESEARCH 4

Advanced Battery Technologies November 16, 2010

RODMAN & RENSHAW RATING SYSTEM: Rodman & Renshaw employs a three tier rating system for evaluating both the potential
return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a
RELATIVE basis of other companies in the same sector, as defined by First Call. The price objective is calculated to estimate the potential
movement in price a given equity could achieve given certain targets are met over a defined time horizon. Price objectives are subject to
exogenous factors including industry events and market volatility. The risk assessment evaluates the company specific risk and accounts
for the following factors, maturity of market, maturity of technology, maturity of firm, cash utilization, and valuation considerations.
Potential factors contributing to risk: relatively undefined market, new technologies, immature firm, high cash burn rates, intrinsic value
weighted toward future earnings or events.

RETURN ASSESSMENT
●
Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the
common stock of companies within the same sector, as defined by First Call.
●
Market Perform (Hold): The common stock of the company is expected to mimic the performance of a passive index comprised
of all the common stock of companies within the same sector, as defined by First Call.
●
Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all
the common stock of companies within the same sector, as defined by First Call.

RISK ASSESSMENT
●
Speculative - The common stock risk level is significantly greater than market risk. The stock price of these equities is
exceptionally volatile.
●
Aggressive - The common stock risk level is materially higher than market level risk. The stock price is typically more volatile
than the general market.
●
Moderate - The common stock is moderately risky, or equivalent to stock market risk. The stock price volatility is typically in-line
with movements in the general market.

Rated Companies mentioned in this report

Company Ticker R&R Rating Price Mkt Cap 12 Month
($ MM) Price Target
China Ritar Power CP CRTP Market Outperform $2.82 $70.39 $10.00
Highpower International, Inc. HPJ Market Outperform 3.43 48.07 7.00

Rating and Price Target History for: Advanced Battery Technologies (ABAT) as of 11-15-2010

09/25/08 03/17/09 08/12/09

I:MO:$7.5 MO:$4.5 MO:$6

0
Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3
2008 2009 2010 2011

Created by BlueMatrix

RODMAN & RENSHAW EQUITY RESEARCH 5

Advanced Battery Technologies November 16, 2010

RATING SUMMARY
Distribution of Ratings Table
IB Serv./Past 12 Mos
Rating Count Percent Count Percent
Market Outperform(MO) 170 74.90% 48 28.24%
Market Perform(MP) 46 20.30% 4 8.70%
Market Underperform(MU) 5 2.20% 0 0.00%
Under Review(UR) 6 2.60% 1 16.67%
Total 227 100% 53 100%

Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of
securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its
affiliates or subsidiaries within the past 12 months.

ADDITIONAL DISCLOSURES
Rodman & Renshaw, LLC. (the "Firm") is a member of FINRA and SIPC and a registered U.S. Broker-Dealer.

ANALYST CERTIFICATION
I, Amit Dayal, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject
company(ies) and its (their) securities.
None of the research analysts or the research analyst's household has a financial interest in the securities of Advanced Battery
Technologies, China Ritar Power CP and Highpower International, Inc. (including, without limitation, any option, right, warrant, future, long
or short position).

As of Oct 31 2010 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Advanced
Battery Technologies, China Ritar Power CP and Highpower International, Inc..

Neither the research analyst nor the Firm has any material conflict of interest with Advanced Battery Technologies, China Ritar Power CP
and Highpower International, Inc., of which the research analyst knows or has reason to know at the time of publication of this research
report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific
investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a
substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Advanced Battery Technologies, China Ritar Power CP and Highpower
International, Inc. for any investment banking services within twelve months before, but intends to seek compensation from the companies
mentioned in this report for investment banking services within three months, following publication of the research report.

Neither the research analyst nor any member of the research analyst's household nor the Firm serves as an officer, director or advisory
board member of Advanced Battery Technologies, China Ritar Power CP and Highpower International, Inc..

The Firm does make a market in Advanced Battery Technologies, China Ritar Power CP and Highpower International, Inc. securities as of
the date of this research report.

Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited. The closing prices of securities mentioned in this report are as of Nov 16 2010.
Additional information is available to clients upon written request. For complete research report on Advanced Battery Technologies,
please call (212) 356-0500.
Readers are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or
the solicitation of an offer to buy. The information contained herein is based on sources which we believe to be reliable but is not
guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance
is no guarantee of future results.

RODMAN & RENSHAW EQUITY RESEARCH 6