China BAK Battery Inc. Reports Operating Results (10-K)

China BAK Battery Inc. (NASDAQ:CBAK) filed Annual Report for the period ended 2012-09-30.

China Bak Battery, Inc. has a market cap of $20.5488 million; its shares were traded at around $1.59 with and P/S ratio of 0.1.

Highlight of Business Operations:

The tax holiday of Shenzhen BAK commenced in 2002, the first calendar year in which Shenzhen BAK had assessable profit, and ended on December 31, 2006. In addition, due to additional capital contributed by BAK International to Shenzhen BAK in both 2005 and 2006 and Shenzhen BAKs qualification as an advanced technology enterprise in 2007 and 2008, Shenzhen BAK was granted a preferential income tax rate of 7.5%, 11.8% and 12.6% for calendar years 2007, 2008 and 2009, respectively. In accordance with the transition period of the EIT Law and before considering the above-mentioned tax concessions, Shenzhen BAKs income tax rate for calendar years 2010 and 2011 were 22% and 24%, respectively, from calendar year 2012, it is expected to be subject to an income tax rate of 25%.

We sold $18.3 million in lithium polymer cells for the year ended September 30, 2012, compared to $10.2 million in fiscal year 2011, an increase of $8.1 million, or 80.2%, resulting from an increase of 43.6% in sales volume, accompanied by an increase of 24.6% in our average selling price due to the increased demand for polymer batteries used in smartphone.

We also sold approximately $10.5 million in high-power lithium battery cells for the year ended September 30, 2012, as compared to $6.1 million in fiscal year 2011, representing an increase of $4.4million, or 72.1%.This resulted from an increase in sales volume of 52.2% due to a strong demand from electric bicycles, power tools, uninterruptible power supplies and other applications, which products are mainly produced in our Tianjin facility, and an accompanied increase of 46.8% in average selling price.

Sales and marketing expenses. Sales and marketing expenses decreased to $8.49 million for the year ended September 30, 2012, as compared to $8.54 million for fiscal year 2011, a decrease of $0.05 million, or 0.7%, primarily due to decreased maintenance expenses of $84,990, resulting from improved cost control under our strategic plan. As a percentage of revenues, sales and marketing expenses have increased to 4.1% for the year ended September 30, 2012, from 3.9% for fiscal year 2011, mainly due to the decrease in sales revenue, which outpaced the decrease in sales and marketing expenses.

General and administrative expenses. General and administrative expenses increased to $40.0 million, or 19.5% of revenues, for the year ended September 30, 2012, as compared to $18.1 million, or 8.3% of revenues, for fiscal year 2011, an increase of $21.9 million, or 121.0% . The primary reason for the increase was that provision for bad debt expenses increased by $20.5million during the year ended September 30, 2012, due to the provision charged following an assessment of account collectability in the second quarter of 2012.

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