ZBB Energy: A Bright Future

ZBB Energy: A Bright Future

ZBB Energy: A Bright Future

Revenue visibility for ZBB Energy Corp. (NYSE: ZBB) is bright. The Wisconsin based developer of intelligent, renewable energy power platforms, and hybrid vehicle control systems announced recently that it has received a contract valued more than $500,000 from Meining Energy, ZBB’s joint venture in China. Prior to this, it had already received multiple orders valued more than $600,000 from Meining Energy. ZBB Energy will deliver components for multiple ZBB EnerStore and ZBB EnerSection units to the Meining factory assembly and testing in Anhui Province, Wuhu, China.

Recently, the company has also received orders from Lotte Chemical (KRX: 011170) in South Korea for a ZBB EnerSystem. In addition to that, Lotte has also placed an order of three EnerStore modules (in unassembled kit form) that will be used to conduct assembly training. It has also established a relationship with Russian engineering firm BPC Engineering which has introduced ZBB’s line of products into the Russian and Commonwealth of Independent States markets. These partnerships with different foreign partners will provide good opportunities for ZBB Energy. For instance, the partnership with Lotte will allow the company to develop and sell its products in various key markets.

While the company continues to report a net loss, the inflow of orders will result in better profitability in the future. Financial results for the fiscal third quarter ended March 31, 2013 showed that total sales increased by 29 percent to $2.119 million; attributed to robust product sales during the period. This translates to an improvement in the bottom line with net loss of $2.82 million, compared to the net loss of $3.47 million for the same period last year. According to management, the improvement is due primarily to the increase in revenues, gross profit and cost measures initiated by the company.

As of the end of the period, the company has a backlog of $5 million with expected collections of $2.5 million in the next quarter based on the current backlog. Management has been aggressively pursuing additional sales orders and other sources of funding, including expansion of contract engineering and development programs through strategic partners.

At present, investors have yet to discover this gem with average daily volume of only 155,907. Assuming the company can post a net profit, it could be valued at 15 to 20 times earnings in line with its peers. Global leader in stored energy solution EnerSys (NYSE: ENS) trades at 15.57 times earnings. Meanwhile, diversified global technology company Emerson Electric (NYSE: EMR)) is valued at 20 times earnings.

ZBB CEO Eric Apfelbach said that the company is in line with its overall objectives for the year in terms of year-on-year growth in profitability. He mentioned that ZBB continues to expand its shipments, and its progress in penetrating key segments and global markets positions the company in securing near-term investment capital. This is an indication that ZBB has the needed resources to pursue and achieve its long-term plans. 

Related News